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STUDIES IN HISTORY
ECONOMICS^ AND
PUBLIC LAW
EDITED BY
THE UNIVERSITY FACULTY OF POLITICAL SCIENCE
OF COLUMBIA COLLEGE
VOLUME FOURTH
COLUMBIA COLLEGE
NEW YORK
1893-1894
% 'LO^ l^
CONTENTS.
1. The Financial History of Virginia, 1609-17 7 6. — William
Zebina Ripley i
2. The Inheritance Tax. — Max West 171
3. History OF Taxation in Vermont. — Frederick A, Wood . 311
820,74
TABLE OF CONTENTS.
PAGE
Introduction 9
Chapter I. Direct Taxation.
The rise of private property 11
The decline of the Company 14
The genesis of public revenue and expenditures .... 17
The poll tax versus the land tax 24
The decrease in direct taxation after 1 700 32
The French and Indian War of 1756 $8
The situation in 1770 43
Chapter II. The Quit-rents.
Origin and development 46
Administration and fiscal importance 50
Decline and disappearance 52
Chapter III. Customs Duties.
History of the export tax upon tobacco 57
Its fiscal importance 62
The import duties upon liquors 67
The tax upon slaves imported 73
Minor export duties : the tax upon hides 78
The tonnage duties 80
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vi CONTENTS.
PAGE
Chapter IV. Local Taxes.
The powers, functions, and fiscal importance of local
bodies 82
The church tithes 87
Chapter V. The Budget.
The constitutional separation of powers 93
Fiscal development and analysis 100
Public domain, lotteries, etc 106
Chapter V. Hard Money.
Early systems , 108
The mint project of 1642 iii
Regulation of the value of silver money by law ..... 1 14
Causes of the dearth of hard money 119
The monetary policy during the 1 8th century 124
The value of the Virginia shilling . 135
Chapter VI. Paper Money.
The tobacco notes '. . . 145
Treasury notes 153
Conclusion 163
Bibliography . ^ 167
I
THE FINANCIAL HISTORY OF VIRGINIA
INTRODUCTION.
A financial history is generally accounted a dull and life-
less work. Taxes, it is said, are hateful things in the eyes
of mankind ; they are not an enlivening subject for contem-
plation. But the same objection may be made to the study
of any social evil. Such things are incidental to a state of
civilization, and we study them in order to discover the most
practical way of mitigating their abuses. The very existence
of society organized in the state renders the study of finan-
cial history necessary, — " the maintaining of the publick in
all estates being of no less importance, even for the benefit
of the private, than the root and body of a tree are to the
particular branches;" — to quote the words of Sir Edwin
Sandys, the moving spirit of the Virginia Company. Thus
there is ample justification for the task herein undertaken.
So much for the subject matter : now as to the method which
has been pursued.
To trace the gradual development of systems and theories
is the main object to be attained. One does not look to a
primitive society and its institutions for well rounded prin-
ciples and technical details ; for to construct a science of
finance, where there was none in fact, would be to pervert
the course of history. Theories do not arise until exper-
ience has taught man the abuses attendant upon social life.
Consequently the financial history of this oldest American
Commonwealth for many years is merely the story of the
simple methods adopted by a people, too fully occupied in
conquering a wilderness to spin fiscal theories, who wanted
to support their incipient government in the easiest possible
(9)
I O FINANCIAL HIS TOR Y [ I O
way. All details which do not bear upon this evolutionary
process, or which do not illustrate the origins of existing so-
cial institutions in some way will be omitted. '* We must dis-
criminate between history and antiquarianism;" — writes the
historian Ingram — ** what from the first had no significance,
it is mere pedantry to study now." Nevertheless in a work
of this kind much detail and many statistics appear to be
unavoidable. I can only plead for these the eloquent excuse
of Governor Dudley, of Massachusetts in a similar case; —
*' If any tax me for wasting paper with recording these small
matters, such may consider that small things in the begin-
ning of natural or political bodies are as remarkable as
greater in bodies full grown."
To those gentlemen, in Virginia as well as in New York,
who have been so unfailing in their courtesy to me, during
the collection of the material for this sketch, I would
acknowledge my sincere sense of obligation. The endeavor
has been to justify, so far as possible, the assistance which
they have so cordially rendered upon every occasion.
CHAPTER I.
DIRECT TAXATION.
The Rise of Private Property. The right of taxation
vested in a state, as well as the obligation upon the citizen to
contribute to the support of it, is based upon the institution
of private property. It is necessary, therefore, in order to
.understand the early fiscal history of Virginia, to know how
its lands were granted in first instance ; what relation existed
between the Virginia Company and the colonists ; and finally
how the institution of private property was evolved from the
early communistic system. The colony was at first essen-
tially a part of a private corporation, organized to develop a
new territory in such manner as to secure the greatest profit
to the stockholders. In pursuance of this idea, the royal
instructions issued under the charter of i6c6 "do establish
and ordaine that the said several colonies and plantations
and every person and persons of the same, severally and re-
spectively, shall within every of their several precincts for the
space of five years, trade together all in one stocke or divide-
ably, but in two or three stocks at the most, and bring, not
only all the fruits of the labours there ; but alsoe all other
goods and commodities, into several magazines or store-
houses : and that there shall be chosen there, elected yearely
by the president and councell, one person to be treasurer or
cape merchant to take the charge and manageinge of all
such goods which shall be brought into or taken out of the
severall magazines."^ This institution must not be con-
^ Hening's Statutes at Large, i, 71.
(11)
I 2 FINANCIAL HI ST OR V I" j 2
founded with the Virginia Company itself; it was a subor-
dinate part of it, the Company merely holding a controlling
interest in its stock. It proved to be so fruitful of abuses,
that it was abolished in 1620, after which date, trade was
opened to every private individual in the colony.^
The first modification of this system was introduced in
161 3 under Governor Dale, after the expiration of the five
years of compulsory communism. Three acres of cleared
ground was allowed to each settler, together with one
month's labor in each year ; the other eleven months were to
be at the disposal of the Company for the cultivation of the
** public garden." At the same time each settler was granted
two bushels of seed corn yearly from the common store.'^
Beside this, every adventurer who came to Virginia, or who
sent a representative, received a hundred acres of forest land,
together with a share in the Company. The price of a share
to mere " adventurers of the purse " was twelve pounds, ten
shillings.'^ This proved so attractive that the land premium
was reduced to fifty acres in 161 6; but even then the devel-
opment of the private estates had much weakened the Com-
pany's resources. The obligation of these settlers was
** to maintaine your Ma'ties right and title against all foreigne and
domestique enemies. To watch and ward in the townes where they
are resident. To do thirty- one day's service for the colony, when
they shall be called thereunto — yet not at all times but when their
owne busines can best spare them — to pay yearlie unto the magazine
for himself and every man seivant two barrells and a half a piece of
their beste Indian wheate. No farmer or other, who must maintain
themselves shall plant any tobacco unless he shall yearly set and
maintayne for himself and every man servant two acres of ground
with corne by which meanes the magazine shall yearely be sure to
receave their rent of corn.'"
^Stith, 171. '^Idid., 131.
^ Purchas' s Pilgrims, iv, 1776. *Neill, Virpnia Co?npany, 107.
13] OF VIRGINIA. I 13
Another method of tenure which was proposed as an in-
ducement to the city of London to apprentice poor children
to the Company was similar to the Metayer system of Italy.^
This was to place *' tenants upon the publick lands with best
conditions wheie they shall have houses with stock of corn
and cattle to begin with, and afterwards the moiety of all in-
crease and profit whatsoever.""" After seven years of this
holding it was to be replaced by a grant of twenty-five acres
"■ in fee simple by socage tenure for the rent of 6d. for every
five and twenty acres, in lieu of all services in regard of the
tenure."'^ One hundred children were sent over under this
contract. But since the charter of the Company was recalled
before the expiration of their apprenticeship, they became
subject to the same quit-rent tenure as the other colonists.*
Finally, a third system of large proprietary grants was
adopted, not unlike the feudal tenures of England. In this
case, the tenants were subject not "to tbe Company, but to
the proprietaries who owned the lands, each making his own
terms with tenants. Yet as land was so plentiful and cheap,
the rents imposed were somewhat less onerous than those
exacted by the Company itself, on account of the competi-
tion among the different proprietors. The first of these
grants was made to Governor Dale, and was known as the
^ Doyle, 187. ^ Virginia Historical Collections, vii, 25. '^ Ibid., 45.
*The system is described in a curious rhyme called "Aezves from Virginia:"
" And when that they shall hither come
Each man shall have his share,
Day wages for the laborer
And for his more content
A house ^nd garden plot shall have;
Besides 'tis further ment
That every man shall have a part,
And not thereof denied
Of general profit, as if that he
Twelve pounds ten shillings paid."
Alex. Brown, Genesis of the United States, 422.
FINANCIAL HISTORY
[H
Bermuda Hundreds. On this plantation the tenants were
required to render but one month's service in the year, " in
neither seed time nor harvest," the other eleven being for
their own private crops. This is in marked contrast to the
Company's tenants who were obliged to labor eleven months
for the use of the land, having but one month in the year for
their own profit. In the Bermuda Hundreds, however, there
was an additional tribute of two and a half bushels of corn
yearly to be paid to the proprietor.^ This system of tenure
was rapidly extended, so that in 1620 there are records of
eleven of these proprietary grants." Their special importance
here is that the rents to these freeholders were at first the
only contributions which tenants had to pay. They were
distinctly feudal in character, but from them were developed
the pubHc dues and services of a later time.
The Declme of the Virgi7iia Company. These grants were
at once a result, as well as a cause, of the rapid decline of
the Company, especially under the pernicious administration
of Governor Argall. The treasurer reported at a *' great
and general quarter court" of May 17th, 1620, that —
" The colony being thus weak and the treasury utterly exhaust, it
pleased divers lords, knights, gentlemen and citizens to take the
matter anew in hand, and at their private charge (joining themselves
into societies) to set up divers particular plantations. But as the
private plantations began thus to increase, so contrarywise the estate
of the public for the setting up whereof about ;^750o had been
spent, grew unto utter consumption ; for whereas the Deputy Gov-
ernor, about May 161 7, hath left and delivered to him by his pre-
decessor a portion of public land called the Company's garden,
which yielded to them in one year about ;£300 profit ; — tenants
eighty-one yielded a yearly rent of corn and service, which rent-
corn, together with the tribute-corn from the barbarians, amounted
to above twelve hundred of our bushels by the year ; kine, eighty ;
I Virginia Historical Collections, vii, 22. '^ Purchas''s Pilgrims, iv, 1776.
I^J OF VIRGINIA. 15
goats, eighty-eight. About two years after — viz., Easter 16 19 — his
whole estate of the public was gone and consumed, there being not
left at that time to the Company either the land aforesaid, or any
tenant, servant, rent or tribute-corn, cow or salt work, and but six
goats only.'" ^
Thus it appears that the revenues of the Company, which
was the government, were rapidly decreasing because of the
changes in these various systems of land tenure. A second-
ary result was that the seeds of future discord were being
sown, which caused much trouble when the questions of ac-
tual taxation arose. There were three distinct classes in
this primitive society. The first was composed of the great
proprietaries, who leased a part of their lands, cultivated
another part themselves, but who also held extensive tracts
of uncultivated forest land. These men were the most influ-
ential in the government for a long time. Secondly, there
were the small farmers on the fifty and one hundred acre
tracts, who cultivated their possessions directly, being sub-
ject however to certain rents to the Company. These
men seem at first have been quite numerous. Lastly, there
was a third class, composed of tenants, indentured servants,
and a few petty traders, whose interests were allied with
those of the small farmers. The development of these
classes is important, since with the institution of negro
slavery they finally came to have divergent interests which
profoundly affected the forms of taxation during the colonial
period.
The general discontent with the Company's communis-
tic system soon became widespread. It was fruitful of so
great abuses that many complaints are preserved in the old
records.^ And it was for this reason that the old arrange-
^ Virginia Historical Collections^ vii, 65.
'^ A letter to Lord De Lawar recites for instance that the Governor *' takes the
ancient colonymen, which should now be free, and our men from the common
1 6 FINANCIAL HISTORY [l6
ment generally fell into disuse. At the same time two dis-
tinct causes cooperated to bring about a change. These
were the convening of the Assembly of Burgesses for the
first time by Governor Yeardley in 1619; and secondly the
growing extent of the colony which made a new institution,
— the parish — necessary for the purposes of local govern-
ment. These soon led to a sharp distinction between the
Company as a corporate body, and the community as a body
politic. The Company declined in importance before the
developing state, and its revenues gradually languished into
nothingness. The treasurer reported in 1621, that "the
plantation founded and prosecuted with the charge of about
one hundred thousand pounds, without any profit as yet,
hath in these latter days been chiefly supported by his
Majesty's most gracious grant of the use of lotteries."^
Heretofore the various payments to the company, whether
in land or in services, had been virtually taxes for the support
of a public body, so far as the colonists were concerned. To
be sure, they were levied by a private company to pay inter-
est upon invested capital ; but in return this body performed
all of the services for the colonists which were necessary to
satisfy their common needs. The real expenses incurred by
it however were insignificant; they were regarded as part of
the necessary outlay in a purely business venture. It was a
question of dollars and cents with them. With the state, on
garden to set them about his own employments, and with the colony's store of
corn feeds his men." — Virginia Historical Collections, viii, 34.
Also, "The heavy taxations that are laid upon us freemen for building of
castles, paying of publique debts, for the not gathering of sasafras, etc., so that it
will come to my share with that that is paid and that that is to pay in come and
tobacco to at least twenty, or five and twenty pound sterling this yeere (1617-8);
so that when I have paid this and paid my faithlesse servants their wages, I shal
scarce have good tobacco enough left to buy my selfe for the nexte yeer a pint of
Aqua vitae." — Purchases Pilgrims, iv, 1806.
1 Virginia Historical Collections, vii, 130.
1 7] OF VIRGINIA. » 17
the other hand, many considerations of a totally different
stamp apply. After 1620, these new governmental expendi-
tures began to increase in importance ; and a study of their
evolution reveals the fundamental purposes for which gov-
ernment exists. It shows the reason why the Virginia Com-
pany was totally inadequate to serve as a substitute for civil
government in a developed society. But of course after its
abolition in 1625, the community became a true body poli-
tic, and the real history of taxation begins.
TJie Begijiniitgs of Taxation^ and Ptiblic Expenditures.
One of the principal charges on a primitive community like
Virginia was the provision for the Governor's support and
salary. At first this had been paid by the Company as an
ordinary charge upon their budget ; but with the appoint-
ment of Governor Yeardley, a new arrangement was made,
whereby three thousand acres of land were " to be set out, so
as to ease the Company henceforward of all charge in main-
taining him." At the same time fifty tenants were trans-
ported by the company to cultivate this domain.^ It was
expected that this permanent establishment would suffice at
least to pay his salary of ;^ioco. ;^ yet the number of tenants
was soon increased to one hundred, with the stipulation that
the Governor should leave as many at the " expiration
of his government as he findeth or went with there on his
entrance." Governor Yeardley's additional offer to admin-
ister the twelve thousand acres of public land *' gratis, the
Company hold it not requisite to accept, but rather to dis-
pose some part of his liberality another ways." ' It was, per-
haps, well that they did so, for Stith tells us* that despite his
liberality, Yeardley left but forty-six of the hundred original
tenants, and moreover, fiatly refused to make up the deficit.^
^ Virginia Historical Collections^ vii, 22. '^ Stith, 165.
^ Virginia Historical Collections^ vii, 54. * Stith, 204.
^ It seeirs to have been the custom to allow the Governors extra compensation
1 8 « FINANCIAL HIS TOR V [ I 3
The only other officer whose support was likely to be con-
siderable— the Secretary — endeavored to impose fees for var-
ious sources upon the people ; but the Council in England dis-
continued them, and as in the Governor's case favored a public
domain for his use and profit, instead of fees. In conformity
with this idea five hundred acres with twenty tenants was
granted to him in 1620, and all the existing fees were abol-
ished.^ With the meeting of the first assembly, in 161 9, a
new corps of officers became necessary. And the first real
tax levied in Virginia, amounting to one pound of tobacco
per poll, was imposed on August 4th, 161 9, for the support
of the speaker, clerk and sargent for their services during
this session."
After providing in this way for the salaries of civil officers,
it became necessary to take measures for the defence of the
colony against the Indians. In this matter the colonists
took the initiative at once. They wrote to the Company's
officers that they were *' very desirous to have engineers sent
unto them for the raising of fortifications, for which they
are content among themselves to bear the charge thereof."
For this purpose it was ordered that " the fifte part of
their hundred be employed in this work till it be p'fected."^
Then, the fort having been built, it became necessary to gar-
rison it, and this gave rise to the custom of commuting mil-
itary services into payments in kind, exactly as had been
done in England three hundred years earlier. In 1623 it
was enacted that*' every man that hath not contributed to the
finding a man at the castell shall pay for himself and servants
at times, for the Treasurer of the Company moved at a meeting on March 3rd,
1619, that ** for his better encouragement the Company would please to send him
a present, it being no new thing, but much used by them heretofore." This
custom is important, as it is the source of some of the extravagant claims of the
later Governors to perquisites, whi(^ proved to be very vexatious to the colonists.
— J^irginia Historical Collections, viii, 47.
^ Stith, 174. ^ Acts, 1 619. * Virginia Historical Collections, vii, 44.
ig-1 OF VIRGINIA. 19
five pounds of tobacco a head ;"^ '* and that for defraying of
such publique debts our troubles have brought upon us^
there shall be levied ten pounds of tobacco upon every male
head above sixteen years of adge now living."^ It being
also necessary to defend the colony against the exactions of
the Royal farmers of the customs, still another poll tax of
four pounds of tobacco was levied by the same Assembly to
defray the expense of sending John Pountis as a commis-
sioner to England.
In 1 62 1 the county courts began to develop, and the
parish first became a local body. This introduced a third
Charge upon the colonists, and in 1623 it was enacted "that
there shall be in every parish a publick granary unto which
there shall be contributed for every planter a bushell of
corne, the which shall be disposed by the major part of the
freemen, the remainder yearly to be taken out by the owners
at St. Tho's his day, and the new bushell to be putt in the
roome."^^ It was only in this matter of local finance that
there was as yet any freedom of action ; the legislature was
still subject to the London Company, in whose quarter
courts various acts of the Assem.bly were much discussed."*
Freedom in the domain of taxation was one of the first
powers claimed by the infant state. But even as late as 1622,
the Governor was instructed by the Company in the matter
of these fort duties that " this tax we haue here made, not
to giue you authority (wch needed not), but to giue a
good example by taking more of the burden than can be
proporcionable can be due unto us — this dipositlon of mynds
we assure o^ selves you shall find, if not you must make it,
and compell them to theire onne good, that will not other-
wise understand it."^ The colonists opposed this principle
from the beginning, and one of the first acts of the next as-
^Heningi, 127. '^ Ibid., 12%. '^ Ibid., 12$.
^ Ibid,, 122. ^Neill, Virginia Company, 353.
20 FINANCIAL HISTORY [20
sembly was especially directed against the exercise of this
paternal power. It declared " that the governor shall not
lay any taxes or ympositions upon the colony, their lands or
comodities other way than by the authority of the general
Assembly to be levyed and ymployed as the said Assembly
shall appoynt." ^ And this power it held firmly through all
the struggles with the ambition and avarice of its executives,
reaflEirming it from time to time as the occasion ofifered.
During the period to 1629 there are no records of legisla-
tion, and the Governor and Council apparently executed the
laws then in force.^ The needs of government were satisfied
mainly by the personal services of the colonists, although a
poll tax was doubtless levied from time to time, as the re-
cords mention payments of tobacco which could be met in
no other way.'^ The contributions, however, must have been
largely voluntary, or at all events could not have been con-
tested, for there is the greatest indefiniteness in the legisla-
tion on the subject. The first tax of 1623 was levied upon all
*' planters" over eighteen years of age ; the second was laid
upon every ''male head" over sixteen, and in 1629 and 1633
the tax was merely " per pole," leaving the question of age or
sex entirely undefined. As yet there were no local officials,
as the Burgesses received the lists of their several planta-
tions, which were made out by the masters of families and
the freemen."^ Unless there had been, a general recognition
of the justice and necessity of such public contributions, and
unless the burden had been moderate in amount, so primi-
tive an arrangement would never have sufficed ; that it was
effective shows that the freemen generally acknowledged the
claims of their incipient state, and did not attempt to evade
their liability. In the period from ^730 to 1740 it became
necessary to develop the system of collection, and the local
^Hening i, 124. "^ Ibid., i2g. ^ Ibid., 1^2.
*' Ibid., 196. ^ Ibid., 143.
2i] OF VIRGINIA. 21
government being modelled after the English pattern, this
work of collection was assigned to the sherififs of the coun-
ties.^ They were made personally responsible for the taxes
assessed in their districts; but at times this proved insuffi-
cient. As in 1644, when from crop failure, collection be-
came difficult, the responsibility was transferred to the mas-
ters of plantations, who were given power to hold the crops
of all the freemen in their households until the levies were
paid.- This was the beginning of that complicated system of
distress and forfeiture which developed later, as a result of
the lax and improvident habits of the planters in colonial
times.
Personal responsibility was thus the basis of taxation at
first, but as the burden of taxation became heavier this
liability was partly transferred to the real estate. A poll tax
of considerable amount being necessary to build a fort in
163 1, the law added,^ '' that for such persons as have departed
out of this county since the contract of the ffort and for such
as have since deceased leavinge sufficient estates, it is ordered
that they shall be lyable to pay this tax." This contained
the germ of a property tax, but its development was very
slow ; and practically it was not till after the Revolution that
this merely contingent liability of real estate, except for ex-
traordinary taxes, became anything like the general property
tax which was the rule in the New England Colonies from
the earliest times. There was, however, a general tendency
manifested in favor of the property tax during the^period fol-
lowing 1630. This, as we shall see, led to the temporary im-
position of such a tax during an Indian war ; but it soon dis-
appeared in favor of other taxes. The idea that possessions
were an indication of faculty appears .ten years later, when
the ideal system was " an assessment proportioning in some
' Hening i, 279. "^ Ibid., 286. ^ Ibid., 150, 157 and 196.
22 FINANCIAL HISTORY T-22
measure payments according to men's abilities and estates
augmented unto the wealthier [sort by the number of milk
kind, and by that relief afforded to the poorer sort, which
course through the strangeness thereof could not but require
much time of controverting and debating."^ Even here no
mention of real estate was made, for land was too plentiful
and cheap ; or perhaps the Assembly was so far controlled
by the landed interests that it was more agreeable to con-
sider property as measured by the number of cattle, rather
than by the acres of land.
It is interesting to note that there was a general recogni-
tion of the justice of exemption for the minimum of subsis-
tence though there was no legal provision ever made for it,
and our quotation shows how great the opposition would
have been to any attempt to introduce it. In fact the only
exemptions at this time were at the opposite end of the scale.
The Governor, his Council, and ten servants each, were re-
lieved in 1639'^ from all public charges in accordance with
the Royal instructions which Governor Berkeley brought
with him. This was reduced to mere personal exemption in
1642,^ which remained the rule until 1676. There had beeh
from the first some other exemptions but there was no es-
tablished rule. The earlier Assemblies exempted all new
comers from taxes and military services for a year, but in
1629 they were again made liable with the older colonists.*
This custom was reversed at a later time when all the old
settlers were allowed special privileges. The system was
more equitably adjusted in 1630, when new comers were ex-
empted from the '' marches " but were made liable to the
payment of the 'public levies. None of these exemptions ap-
plied to the tithes, which were very considerable in amount ;
"^Remonstrance of the Assembly against the charter of a new Company, 1642;
Burk ii, 68.
2 Hening i, 228. ^ Ibid., 307. * Ibid., 141.
23] OF VIRGINIA. 23
and the general principle appears to have been to levy upon
everybody and collect where they could.
After 1639 the Governor appears to have received a regu- -
lar salary allowed by the king from the tax upon tobacco
exported, in place of the revenue from the lands formerly
granted for his support, which had reverted to the king with
the dissolution of the Company.^ On the establishment of
the Commonwealth this revenue ceased. To provide for his
support an act was passed in 1643 levying a poll tax of the
value of two shillings, to be paid in commodities at fixed rates.'^ '
There were two reasons for this departure from the custom
of levying all taxes in tobacco; first, that it was a year of
Indian troubles and short crops; and secondly, because the
taxes in kind could be made so various that they would
serve for the Governor's *' accommodation for the presenf
year." Thus he would not be subjected to the delay and
risk of realizing upon his tobacco by shipping it to England
in the disturbed state of affairs then existing. This view is
supported by the further provision which ordered seven
counties to pay in corn, while three were permitted to con-
tribute general supplies. The sheriffs were empowered to
hire boats and bring these provisions directly to the Gover-
nor's '* palace." This, with the grant of a house and lot,^
completely provided for his support. It is a good example ^*^ /€
of the primitive method of taxation then existing under a sys-
tem of barter, and before there was anything like a treasury or
^ Burk ii, App. v; also p. 34.
'•^ " Indian corne at 10 sh. per barrell, 2 barr. of ears to one of Corne. Wheat
at 4s. per bushell. Malt at 4s. per bushell. Beife at 3d. i-2d. per pound. Pork
at 4d. per pound. Good henns at I2d. Capons at is. 6d. Calves at 6 weeks
old, 25s. Butter at 8d. per pound. Good weather goats at 2cs. Piggs to
roast at 3 weeks old, at 3s. per pigg. Cheese at 6d. per lb. Geese, Turkeys and
Kidds at 5s. per peece." — Hening, i, 280.
^Neill, Virginia Carolorum, 171.
A-^
24 FINANCIAL HISTORY [24
a civil list. This lasted all through the seventeenth century,
for as late as 1679 we find on the occasion of an Indian war
*' that every forty tythables (are) assessed and obliged to fitt
and set forth one able and suffitient man and horse with fur-
niture well and compleatly armed. "^ There was no inter-
vention of the public body to provide supplies or ammuni-
tion, but the settlers cooperated to perform certain duties
which- were common to them all.
The Poll Tax versus the Land Tax. The year 1644 was
filled with misfortune. There were disputes between the
partisans of the Puritans and Cavaliers ; and then it was
deemed necessary to send Governor Berkeley to England to
negotiate terms of peace. For this purpose an extraordi-
nary tax of eighteen pounds of tobacco per poll was levied,
of which the sheriffs " converted a great part to their private
benefit."^ We have already seen that all of the expense of
providing for the support of the government had been cast
upon the colony after 1625. The tobstcco trade was greatly
disturbed, and there was a shortage in the crop. There had
been an outbreak of Indian hostilities, by which over three
hundred lives were lost, and it became necessary to levy an
extra poll tax for this purpose. Many settlers were im-
pressed, and many others abandoned their plantations for
fear of the Indians, so that the crops were still further cur-
tailed.^ It became necessary to erect three forts, for which
service many artisans were impressed. To meet all of these
expenses the number of tithables was increased by including
all negroes, men and women, and every fifteen who remained
at home were held liable for the equipment and maintenance
of one soldier in the field. The distress became so great
that poor debtor acts were passed, and finally the planters
were so hard pressed that they could not even pay their
^ Hening ii, 435. ^ Hening i, 286-297. ^ Ibid., 287-291.
25] OF VIRGINIA. 25
"wine debts;" and payment of two-thirds of these was ex-
tended until after the collection of the next crop.
The result of this accumulation of disasters was a great un-
easiness among the people under the heavy burdens imposed
upon them. In 1645, it became necessary to satisfy this
popular demand by a levy of extraordinary taxes upon pro-
perty, although all public charges had been met heretofore
by means of a simple tax by the poll. This act ^ recited that
''whereas the ancient and usual taxing of all people of this
colony by the pole equally, hath been found inconvenient,
and is become insupportable for the poorer sorte to beare,
that (hereafter) all publique levies and county levies be
raised by equall proportions out of the visible estates in the
colony. The conformity of the proportions to be as follow-
eth, vizt
One hundred aces of land
One cow 3 years old
Horses, mares and geldings
A breeding sheep
A breeding goate
A tithable person
This act did not abolish the poll as a basis of taxation, as
some historians have asserted. The capitation tax was con-
tinued at about the usual rate, while the other property
taxes were merely supplementary, " being onely intended
for the better support of the warr, and no longer to con-
tinue."" Consequently they were repealed in 1648, leaving
the customary poll tax once more as the basis of all the
levies. The preamble of the act, which is quoted above,
was apparently nothing more than a sop to quiet the popu-
lar demand for a more equitable distribution of public bur-
dens, extorted from the wealthy planters who held control
of the assembly. This in fact marks the beginning of that
struggle between the great and the small land owners, the
^Hening i, 305. "^ Ibid., 356.
at
04 lbs. tob£
at
04
at
32 a peece.
at
04
at
02
at
20"
26 FINANCIAL HISTORY r26
cause of which lay deep rooted in the origin of private pro-
perty under the old Virginia Company. This in time crys-
tallized into a sectional as well as a class antagonism ; and
it lasted until Virginia was finally subdivided into two states.
Already the wealthy planters on the tide-water belt were
united in opposing a tax upon their uncultivated lands, while
the tenants and small farmers favored the abolition of the
poll tax.^ This temporary property tax does not indicate
the acceptance of any new principle ; it was merely an ex-
pedient to meet a sudden emergency. The real change was
long delayed ; in the meantime a redistribution of power
was necessary, through the increase in the number of small
farmers by the settlement of the upland country. The old
struggle for political supremacy between the men of the
mountain and of the plain had to be definitely settled before
there could be any permanent change in the syst-ems of tax-
ation.
The imposition of this land tax seems to have been indi-
rectly the cause of a great many abuses in the following
years, which were marked in other respects as well as by an
unusual laxity in public morale.^ In a community so scat-
tered as was Virginia, where there were no towns and where
each plantation was a completely self-sufficient organism, it
was very easy to conceal the exact number of slaves, horses
and cattle. In 1646 the first complaint on record was pre-
sented of "greate defect in the titheable persons, lands,
horses, mares, etc., to the prejudice of many who have duly
and according to. law presented their lists." "* Three years
later the Assembly discovered that ** notwithstandinge the
pearly importation of people, the number of tithcablcs is
rather diminished than augmented."* The youth of the
colony under sixteen were exempted from the poll tax, yet
^Burk ii, 249. '-^ Doyle, 237. "Hening i, 329. * Ibid., 361.
27] OF VIRGINIA. ' 2 7
it appeared * that once passing under that age they are sel-
dom or never acknowledged to exceed the same." ^ Female
slaves being exempted, the custom of employing them as
field hands instead of men became so general that an act
was passed to cover the case. Even when taxes were paid
they were often rendered in worthless tobacco, raised by
**bad men" for that purpose.^
It must not be thought that all the abuses lay upon the
side of the tax payers. The corruption and venality of the
sheriffs was a constant cause of complaint. In the year
of scarcity, 1644, we have seen that the sherifTs received
"great private benefit" from a tax levied to send Governor
Berkeley to England. Other abuses arose from the '* vast
extent " of the counties, or from the " multitude of other em-
ployments " of the sheriffs.^ The laws themselves were also
very indefinite. Sheriffs were thus enabled to demand pay-
ment at disadvantageous seasons, often with the intention of
compelling distress or forfeiture in order to increase the fees
of their offices.* Even the Burgesses declared in 1661 that
" the fraud of sherifTs hath very much augmented the taxes."
Lord Culpepper wrote that the levies were '' commonly man-
aged by sly cheating fellows that combine to cheat the pub-
lic;" he affirmed that it cost twenty per cent of the taxes to
collect them.^ The sheriffs often connived with the planters,
so than an act was passed to punish all who took tobacco for
tithables, whose names were not on the lists.^ Even this
last expedient of posting all tithables on the court house
doors was not enough, and a registry of births was instituted
' By a law of 1661, all males were made liable to the poll tax. This was
moderated in 1680, when it was declared " too hard and severe that children shall
be liable to taxes before they are capable of working." — Hening ii, 480.
^Hening i, 170, ii, 186; also McDonald MSS., vii, 9.
^ Hening i, 342. * Hening i, 358 and 389.
^Ch. Campbell's History. ^Hening ii, 412.
28 FINANCIAL HISTORY [28
in 1672.^ Penalties were made very severe, even to the ex-
tent of forfeiture of any slave concealed. And yet in spite
of all these regulations the Burgesses were obliged to confess
that evasion of taxes was very general.'^
A curious but natural state of affairs resulted ; the Gover-
nor and Council, as well as the Assembly and the people at
large, were all agreed in condemning the poll tax. The diffi-
culty was that their remedies and substitutes for it dififered
as widely as the underlying motives. In 1658 the Burgesses,
representing the landed interests, considered ''the burthen-
some and unequall waie of layinge taxes by the pole, and
how just and proportionable it will be to impose the same on
our comoditie made;"^ and ordered an export tax upon to-
bacco. Three ye^rs later they repeated that '' the prudence of
all nations hath provided for the defraying the publique neces-
sary charges rather by laying an imposition upon the adven-
turer for the staple comoditie than by taxing the persons of
the inhabitants."* The motive behind this was doubtless
their desire to abolish all direct taxes which bore upon them
as planters and slave owners. Opposed to this advocacy of
indirect taxes, the Governor and Council unanimously rep-
resented to the House in 1663 "that the most equal way of
paying taxes is by laying a levy upon land, and not upon
heads." ^ The intention of this party was to take advantage
of the sentiment in favor of the Royal prerogatives, which
followed the Restoration, and by imposing a property quali-
^ Vagrants were common in the year 1696, which was another source of trouble.
The Assembly declared that " Whereas Loose & vagrant persons, That have not
any settled residence do too commonly enter themselves singly and not in any
housekeeper's list of Tithables, and when the time comes that the Sheriff goes
about to collect the publique dues, they abscond and remove from place to place
on purpose to defraud the County of their Levies by reason whereof ye Taxes
grow the more burdensome and grievous to the settled p'sons of the Inhabitants
of the County." — Calendar Virginia State Papers, i, 52, and Hening iv, 208.
'^ Hening ii, 187. ' Ibid, i, 491. ^ Ibid, ii, 133. ^ Ibid., 204.
29] OF VIRGINIA, 29
fication upon the voters, to disfranchise the class which was
most inimical to the Crown and its interests. ^ This latter ob-
ject, indeed, was accomplished by a different expedient, but
its effect was rather unexpected. The " little folk," the ten-
ants and small farmers, now appear to have welcomed this
proposed land tax, although they had pot yet come to re-
gard it as other than a resource for extraordinary occa-
sions, as we have seen it was in 1645. Naturally they de-
sired to make the greater land owners pay the public charges,
and so " lessen the levy by the pole." ^
It was a question of great importance, for this was a time
of "extraordinary taxes," and the poll tax far ekceeded all
the other public charges, including, as it did, the local taxes.
These were very heavy, so that the total levy was often in
excess of one hundred lbs. of tobacco a head.'^ The Assem-
bly now by an appeal to the people, on the plea of restrain-
ing the political power of the Governor, gained their support
in the rejection of his proposals. And any lingering distrust
on the part of the would-be land taxers, was allayed by the
unctuously flattering declaration that "■ the lives and industry
of the citizens were more valuable than lands and houses."*
The consequence was that the Governor yielded to the
people ; the people gave way to the Assembly ; and the poll
tax was continued, although it was gradually reduced by
custom duties upon liquors and slaves imported, and the
export of tobacco. It remained, nevertheless, the only
direct tax which was levied, the quit-rents being merely
nominal and being paid to the King. On all extraordinary
occasions it was the main support of the government, as in
1662 when fifty pounds of tobacco was levied to build James
^ Burk ii, 137. "^ Ibid., 249.
^ Virginia Historical Register, 1850; reprint of a letter of Gov. Spotswood.
*Burk ii, 137, and Hening ii, 480.
30 FINANCIAL FII STORY [30
City. In 1674, again, fifty pounds with cask was imposed
or two years, to pay the expenses of. sending Commission-
ers to England to remonstrate against the patents granted
to Lord Culpepper and others/
This extra tax of five shillings more or less, which was
nore than double the ordinary levy, was coupled with court
ees of seventy pounds for suits in the general, and fifty
pounds for suits in the county courts.'^ It seems indeed to
have been one of the causes which led to the popular out-
break in 1676, known as Bacon's Rebellion. The abuses
which we have seen were so common in administration, had
become unbearable ; malfeasance in ofhce,-^ and misapplica-
tion of the colonial revenues, added to the discontent in-
duced by the languishing state of the tobacco trade^ and
the war with the Dutch ; the restriction of the sufifrage by
various acts of Assembly ; all combined to produce a great
popular discontent,"^ and the old question of the poll versus
the land tax came to the front once more. The duty of a
shilling a hogshead on tobacco exported, did not sufhce to
pay the expenses of government, and the popular demand
was that it should be supplemented by a land tax. This it
was urged would be '' the most equal imposition, and will
generally take off the complaints of the people, although
some of the richer sort will not like it, who hold a greater
proportion of land than they actually plant ; who may then
by an expedient, very beneficial to the country, lay down
^ Hening ii, 174, and 313.
2 Ibid., 506, and Eleventh Census, History of Tobacco, by R. A. Brock.
3 Hening ii, 353. * Doyle, 235.
" Our trade is now in a more declining condition than hath ever been known,"
largely by reason of the " low value or rather no value of our comodity tobacco."
— McDonald MSS.W.
^Oldmixon, 250.
^l"] OF VIRGINIA. 31
part of their lands to be taken up by such as will employ
it."^
Here again appears a demonstration against the class leg-
islation which was so often the rule in Virginia politics, and
which we shall see recurring upon every possible occasion.
The whole control of the Assembly and of the county courts
was, in this period after the Restoration, more than ever in
the hands of the landed gentry ; and they insisted upon a
continuance of the poll tax, in spite of the wishes of the
Governor and of the small planters and tenants. The so-
called Virginia Long Parliament, elected after the Restora-
tion, sat until 1676,^ and capped the climax of abuses by
levying this extraordinary charge for sending Commissioners
to England entirely upon the devoted polls of the " poorer
sort." New forts were built by laying more taxes of the
same kind ; and great abuses had crept tnto the method of
granting land patents, which likewise bore with peculiar force
upon the yoemanry, the tenants, the artisans, and the poor
whites. These ''little folk," with the voters disqualified by
that act of 1670'^ which restricted the suffrage to freeholders
and housekeepers,. were the followers of Nathaniel Bacon in
the notorious rebelHon of 1676.
The brutal suppression of the revolt and the subsequent
pernicious rule of Culpepper, strengthened as he was by the
most liberal grant of power from the King, put an end to all
hopes of a reform in the methods of taxation. Complaints
were sent to the Board of Trade and Plantations in England
from time to time ; but this august body contented itself
with recommending naively to those who complained of un-
just taxes that they find a more easy way of raising money.*
^ Letter from Mr. Bland, collector of customs; reprinted in Burk ii, 249.
^ Doyle, 237. ^ Hening ii, 280.
^Minutes, Sainsbury MSS., viii, 220.
32 FINANCIAL HISTORY [32
This Council, however, after a while began to take note of
these complaints and in a letter of September 20th, 1683,
recommended that the poll tax be abolished and a duty upon
tobacco be substituted for it.^ On the appointment of Lord
Effingham as Governor he was commanded by the King to
discover a way of raising revenue " more equal and accept-
able "than the customary poll tax.'^ There was as yet no
tax upon land, and this poll tax, though now secondary to the
indirect taxes, was often considerable in amount. Still it
tended gradually to become lighter toward the close of the
century.^
The Decline of Direct Taxation after lyoo. The general
theory of taxation in vogue about the beginning of the eigh-
teenth century was that the land paid its just proportion of
public burden through the quit-rents ; that foreign trade was
charged with the customs duties ; while '* stock" was of little
account,"* Since the quit-rents had largely fallen into disuse
previous to Governor Spotswood's advent, the first part of
this theory was not true ; the customs duties did indeed pro-
duce a very considerable revenue, but a large part of them
were as yet accounted for by the Auditor and Receiver Gen-
eral, who were royal officers ; they were devoted to the pay-
ment of their salaries, and the support of the Governor and
Council, and thus were not available for general expenses.
The general, county, and parish levies were in ordinary
^ McDonald MSS., iii, 31. To this communication the Governor made reply,
that " all these instructions are extremely good and necessary, but I have not as
yet had occasion to put them in practice."
^ Ibid., Oct. 24th, 1683.
^The poll t^x was in 1674, 12 lbs. of tobacco; 1682,89 lbs.; 1684,47 lbs.;
to 1686, 104 lbs.; to 1691, 183^ lbs.; to 1692, 17)^' lbs.; for 1692, 13^ lbs.;
to 1694, 21 lbs.; 1695, 22^ lbs.; 1696, 16 lbs.; 1697, 16 lbs.; to 1699, 19 lbs.;
to 1700, 9 lbs.; 1705, 3^ lbs.; 1710, 9^^ lbs. — Hening,vol. iii.
^ An account of the present state and government of Virginia, Blair and Chilton,
1697; Massachusetts Historical Collections, Series i, vol. v.
33] OF VIRGINIA. 33
times the only direct taxes which could be depended upon ;
and they alone were paid into the hands of the treasurer,
who was responsible to the Assembly, and who was ap-
pointed by it.^
In a time of peace the principal expenditures were for
these of^cial salaries ; consequently the poll taxes became
less and less important. There is in fact no record of a levy
of tobacco for nearly twenty years after i/io."^ The Bur-
gesses, secure in a source of revenue which allowed the ex-
emption of their lands from taxation, condemned the poll
tax henceforth "■ as grievious and burthensome ;"^ and indi-
rect duties were declared to be the *' most easy expedient for
raising a fund to answer the exigencies of government with-
out subjecting the people to a poll tax."* So opposed was
the Assembly to the capitation tax that, when there was a
threatened Tuscarora uprising in 1 711, and in the sudden
emergency it became necessary to increase the revenue, they
refused to resort to their old exp^edient at all. Instead of
this they passed a law to impose a ten per cent, duty upon all
imports from Great Britain, which even when reduced to six
per cent., was of course promptly vetoed by the Governor."
He proposed, as Governor Berkeley had done fifty years be-
fore, a tax of a half a penny an acre upon lands ; but the
Assembly — ** men of narrow fortunes and mean understand-
ings"— simply ignored the proposition, and sat seven weeks
without as much as referring to this proposal.*^ The con-
^ Burk ii Appendix xix.
2 The levy of 17 10, 93^ lbs., and then of 1727, 10)^ lbs.
^Hening iv, 143, 1726. *" Ibid, v, 26, 1738.
^ Governor Spotswood wrote, " I'm persuaded they would propose taxing the
Import of goods from Great Britain as one of their chief Funds, — that they might
throw the expence as much as possible off themselves." — Spotswood letters^ i, 130.
^ Spotswood letters, \, 12,Z'
34 FINANCIAL HISTORY ■ [34
sequence of course was that neither a land tax nor a duty upon
irnfports was levied.
T\it next few years (171 3-14) were marked by some em-
barrassment in the tobacco trade, so that the duty upon
imported tobacco did not even suffice to pay the Governor's
salary, and the public revenues were considerably curtailed.
The deficit in the budget was also increased by a systematic
evasion of the quit-rents. The Governor declared that the
Burgesses "were persons of the meanest Capacities and most
Indifferent circumstances, and whose chief recommendation
to that Post is their declared resolution to raise no Taxes
upon the People for any occasion whatever."^ This worthy
official was doubtless prejudiced to some extent ; yet it is
true that considerable obstinacy was manifested by the As-
sembly. They had, however, a special object in view, which
was political rather than fiscal in its significance. They were
trying to force the Governor to devote the quit-rents to the
ordinary expenses of government instead of remitting them
to the king. The Assembly exhibited a marked tendency,
nevertheless, toward the abolition of all direct taxes, which
was characteristic of the eighteenth century.
After 171 5 there succeeded a period of peace and pros-
perity, during which matters settled down into a regular
course, which was not interrupted until the war with the
French in 1756. The general expenses of government, ex-
clusive of the fixed salaries, were still met by a poll tax : it
was small, however, varying from three to five pounds of
tobacco a head." In 171 8 the Governor declared that,
^ Spotswood Letters, Aug. 9th, 171 5.
■' The general levy by the Assembly was : 1727 to 1730, loj^ lbs.; 1732, 9 lbs.;
1733, 8 lbs.; 1734, 8)^ lbs.; 1734-6, ^% lbs.; 1736-8, 11 lbs.; 1738-40, 6 lbs.;
1740-2, 4)^ lbs.; 1742-4, 6 lbs.; 1744* 5 lbs.; 1748-52, I2>^ lbs.; 1752,5)^
lbs.; 1753-5, 63^ lbs.; 1759, 6 lbs.; 1761, 6 lbs.; 1762, 7 lbs.; 1768, 2 sh.; 1766,
8 lbs.; 1769, 9 lbs.; 1772, 6 lbs. The county levy in 1732 was 4 lbs. — Heifing,
iv, 370. Burk gives the average levy for county expenses as 3|o lbs., iii, 403.
35] OF VIRGINIA. 35
" Neighboring provinces must envy Virginia's ease from
Public levies when they shall know that 80 lbs. of tobacco
per poll is the total sum that has been levied on her people
for eleven years past."
Thus the development appears to have been analogous to
that of the mother country during the eighteenth century.
There, as in Virginia, indirect taxes and especially excises,
became more and more popular. It is but natural that the
influence of such statemen as VValpole, and the economic
writers like Petty and North, should have been felt in this
colony. At last the distaste for all direct taxes became so
strong that the attention was directed to them rather than to
persons or property, even for extraordinary occasions and
sudden emergencies.^ In 1748 a proposition was made to
move the capital of the Colony from Williamsburg to a site
on the Pamunkey river, and the question of compensation to
the first named city was raised. The only expedients that
could be devised to obtain ;^6ooo for this purpose, were an
increase of the regular export tax upon tobacco, despite the
great embarrassments in this trade, and the imposition of a
tax of ten shillings upon all coaches and chariots. The
Assembly rejected absolutely a resolution to raise the money
by a poll tax.'"* Although the entire project came to naught,
it is a clear indication that the ancient direct tax by the poll
was in great disfavor. Nevertheless, it was still levied from
time to time, as we have said, and was a considerable source
of revenue. It was the only elastic tax ; the others were
'An act of 1753, for the encouragement of settlers on the Mississippi, for in-
stance, imposed an ad valorem tax of 5 % on all slaves imported, 20 shillings on
all four-wheeled carriages, and 10 shillings on every 2-wheeled chair, 20 shillings
on every ordinary vehicle, 2 sh. 6d. on every suit in the general court, and i sh.
3d. 041 suits in county courts. — Hening vi, 41 7. It was voted " with great solicitat'n
and all the possible Int's I c'd make." — Spotswood letters, 1753.
'■Journal, Nov. nth and i8th, 1748.
36 FINANCIAL HISTORY [36
limited by the conditions of trade ; the tobacco tax was not
disposable by the Burgesses, being granted to the king's offi-
cers ; and the liquor duties could not be screwed to a higher
notch for fear of prohibiting the traffic. The main point to^
be noticed is that the real property of the colony was not re-
garded in any sense as a basis for public contributions. The
owners of carriages, even, were taxed because they could
afford them as luxuries, while their houses and lands were
exempted, as being necessary to their comfort and support.
Why did the sentiment in Virginia turn in this way from
the early poll tax in favor of a system of indirect taxes on
exports and imports, if there was so complete a domination
of the landlords' interests in the legislature ? If the early
system was allowed, why had it now become their interest to
change the general basis of taxation ? Two answers may
be found : first, the change in the system of land tenure;
and secondly, the growth of the institution of negro slavery.
Under the Company the policy of small peasant proprietor-
ships was fostered ; but this gave way in a few decades to an
extensive monopoly of the soil by a few proprietors. The
soil was cultivated at first by white servants who were im-
ported under indenture,' to work for a master a few years,
and then become independent proprietors. Under such a
system the poll tax did not bear with especial weight on the
wealthier planters, who were absorbing the land in the first
half of the 17th century. The indented servants becoming
free in a short time, at once assumed their due share of the
burden of taxation.
After 1640 a considerable change in the character of the
immigrant population took place.^ The earlier indented
servants were succeeded by an ignorant and vicious class of
transported paupers and convicts, children ["kids"] were
^ Heningi, 257.
'^ Life of Tfios. Jefferson, by Geo. Tucker; Doyle, 383.
^yl OF VIRGINIA. 37
kidnapped in great numbers, and a considerable trade in
white slaves was established.^ As the cultivated territory
became more extensive the evils of this old system became
more apparent; and the planters turned to the growing
slave trade of Africa for their supply of labor. Conse-
quently the negro slave rapidly took the place of the white
servant toward the close of the century, largely owing to
the influence of the Royal Africa Company.'^ There were
three times as many white servants in 1671 as there were
negroes. In 1724 it was said, "that these servants are but
an insignificant number when compared with the vast shoals
of negroes." By 1756 the negro tithables numbered over
60,000, while all of the white tithables, masters and servants,
amounted to only 43,000.'^ The negro was better suited to
the climate, was contented in a state of servitude, and would
never hope to emerge from it. On the other hand, the in-
dented servants were a restless, discontented lot. There
was no place for them on the expiration of their apprentice-
ships ; no towns and no manufactures existed ; the land was
all owned by the great planters ; and there was no possible
chance for competition with slaves in agricultural labor. The
new slave system was therefore economically justifiable ; but
it was ill adapted to recommend the poll tax to the great
slave-holders. This tax had been a partial relief to the pro-
prietors in earlier days. With the new system it became
peculiarly onerous to the planter, who was responsible for the
tithes of all his laborers ; and this great change in the charac-
ter of the laboring classes offers an adequate explanation
for the decided change in public sentiment which took place.
^ Hugh Jones' Present State of Virginia, 1 724.
' For an excellent description of the pernicious influence of this great monopoly
on the economic development of the South, see the Life of R. B. Taney, by Sam
uel Tyler, Appendix 580.
■'* Hening ii, 515; Hugh Jones; Dinwiddie Letters.
38 I^INANCIAL HISTORY [33
In connection with the various constitutional reasons which
appealed to all classes alike, it caused the partial retirement
of the poll tax during the early part of the i8th century.
The French and Indian War. The colony was rudeh-
shaken out of its peaceful content by the French and Indian
war of 1756. This was the^first great struggle in which the
matured colony engaged. It became necessary therefore for
a time to broaden the basis of taxation, and to recognize an-
other principle of pubHc contributions. The first impulse of
the Burgesses on the outbreak of hostilities was to turn at
once to the poll tax which, although relegated to a subordi-
nate place in the budget, had long been the customary re-
source for all extraordinary occasions. It was resolved in
1754, "by great Persuasion, Many Arguin'ts and much
Trouble" on the part of the Governor, to raise ^20,000 by a
poll tax of 2 sh. 6 d., or 3olbs of tobacco to be levied twice
during the year.^
In the spring of 1755 more money was needed, and the
poll tax on negroes was again the main stay,"^ but it was sup-
plemented by a tax of I sh. 3d. on every hundred acres of
land. This is remarkable as the first land tax which had
been imposed for over a century, despite the agitation and
struggles of the minority in the Assembly. The fund arising
from the export tax on tobacco was almost exhausted;^ no-
thing more could be expected from it; and in August 1755
;^40,ooo more was levied at 3 sh. per poll and i sh. 3d. per
hundred acres of land, to be continued for three years.*
The Assembly tried in vain to impose a five per cent, duty on
imports, but it was abandoned as impracticable.^ The legis-
lature then essayed various methods of raising money which
should be less onerous than direct taxes. They endeavored
> Hening vi, 436. "^ Ibid., 463. =* Journal, March 25th, 1756.
*Hening vi, 522. ^Journal, Aug. 8th, 1755.
39]
OF VIRGINIA.
39
to set up a Loan office and issue a large amount of paper,
but the Governor held them in check for a time ; then they
tried a lottery, but finally were obliged to revert to taxes.'
The distress and poverty of the people became very great.'^
Yet the poll and land taxes were the sole resource ; the
rates were doubled and ti;ebled,'' but they were grudg-
ingly granted and proved difficult to collect/ The rate per
poll was screwed up to 5 shillings, and upon land to 3 shill-
ings per hundred acres.^
The Governor at first seems to have regarded the poll tax
as the most available one, for, driven to desperation by the
aggressiveness of the Assembly in asserting its financial
^ " Money is so extremely scarce, y't in order to protect our Frontiers an act is
passed for a lottery to raise ;^6ooo and to allow the Treasurer's notes to pass as
money for the amo' of ;^20coo."
2 " I think I c'd raise two or three thous'd Men, but the people are so very poor
we cannot raise money to pay, cloth and maint'n them." — Dinzviddie Papers.
^Direct Taxes Levied During the French and Indian War.
Session, when Passed.
Date of
Payment.
October, 1754 | April, 1755.
October, 1754 .October, 1755.
May.1755 ! April, 1756.
August, 1755; March, 1756 April, 1757.
August, 1755 ; M arch, 1756 1 April, 1758.
August, 1755; March, 1756 April, 1759.
August, 1755 ; M arch, 1756 ! April, 1760.
April, 1757; March, 1758; Septenaber, 1758.. I April, 1761.
April, 1757; March, 1758; September, 1758..' April, 1762.
April, 1757; March, 1758; September, 1758..; April, 1763.
April, 1757; March, 1758; September, 1758;!
March, 1762 { April, 1764.
September, 1758; February, 1759; March,
1762 April, 1765.
September, 1758; February, 1759; March,
1762 April, 1766.
March, 1760; May, 1760; February, 1759;
March, 1762 April, 1767.
March, 1760; May, 1760; February, 1759;
March, 1762 | April, 1768.
March, 1762 April, 1769.
Poll Tax
(Shillings).
Land per ]
Hundred
Acres. 1
2.6
2.6
1
2 (negroes.)
I
2
2
2
4
4
4
2.3 1
2.3 1
2.3
\
3
5
3
5
5
5
2
!
,. 1
5*.
3*
2*
1-3* ;
Amount.
;^IOOOO
1 0000
20000
65000
* Repealed March, 1768.
* Washington Letters^ by W. C. Ford, i, 251. ^ Hening vii, 9, 77, 165, 172.
40 FINANCIAL HISTORY [40
supremacy, he proposed to the Governors of the other col-
onies that they recommend an Act of ParHament for a gen-
eral poll tax. Of this, he observed " the Poll tax at 2 sh/
w'd not be much felt if the poorer sort w'd only deny them-
selves Punch for one Day at the Courts, w'd pay that tax."
With the increasing distress he changed this view, and two
years later proposed to reduce this poll to twelve pence and
to levy two shillings on the land.'"^ This modification was
recommended " as the most equal, as it will be chiefly paid
by People of the greatest Property and great Land Holders."
He affirmed that this would raise ;^6,ooo and with the quit-
rents would amount to less than ^d. an acre, as the total
burden on the land owners. Assuming the average value of
a slave to be ^60, as it was a few years later,"^ a poll tax of
five shillings would amount to a rate of four mills on the dol-
lar, although this was increased considerably by the poll tax
upon the owners and their famihes. At all events it was less
than a rate of a cent an acre on land, which was all the land
owners as such w^ould have to pay. Land was probably
worth from two to ten dollars an acre according to quality,
which would make the average rate less than two mills on
the dollar.*
This certainly does not appear to be a very equitable pro-
portion between these two levies. The poll tax in the first
year of the war bore the whole charge of the campaign.
There were about 105,000 tithables in 1759," which at a two
shilling rate ought to have produced over ;^i 0,000; whereas
the two shillings tax on land for the first two years of the
war yielded less than ;^4,ooo. This land tax in fact was a
secondary resource ; it was not imposed until a year after
"" Dinwiddle Papers, July 24th, 1754. '^ Ibid., Feb. 23d, 1756.
'^ Richmond Dispatch, Aug. i6th, 1877.
* Letter of R. A. Brock, Esq., of the Virginia Historical vSociety.
^Burnaby "J 'ravels, 711.
^ll OF VIRGINIA. ^ 41
7 the war began, when the poll tax was reduced ; and there-
fore its proportional rate of increase was far less ; it was not
augmented in March 1762, when an additional poll tax of
five shillings was levied for five years ; and finally the act of
March 1768, which repealed all the war taxes, reduced the
land tax a year earlier than the others. The revenue from the
poll tax bore an ever increasing proportion of the charges
upon the budget; it was 2.4 times greater than the revenues
of the land tax in 1763 ;, in 1766 it was estimated to be three
times as great; and in 1769 was expected to yield four times
as much.' This land tax was levied, as it had been a century
earHer, only as a last resort, when all other expedients of
loans, lotteries, customs, and excises had failed : it was re-
duced at the first possible opportunity, and never was ex-
pected to yield over ;^ 10,000 as in 1763, while the poll tax
was calculated to produce thrice that amount.'^ (in 1763 the
poll tax alone produced more than all the other taxes, on
land, on tobacco, and on slaves imported, together with the
licenses, fees, and carriage duties which now appeared for
the first time ' as general taxes." ]
There is no departure in principle, then, during this war,
from the course which had been customary from the settle-
ment of the colony, of demanding all direct contributions on
a per capita basis. The treasury notes which were issued
during these years, were merely to anticipate revenue, and
were not productive in themselves. We have seen that later
in the i8th century, the easy expedient of indirect taxes was
discovered, but their application was limited by the exigen-
^Journaly March 24th, 1763. '^ Ibid., February 28th, 1759. •' Hening, vii, 640.
* The revenues from the various taxes were as follows : Tithes, ;^24000 ; land
;^ioooo; export tobacco tax, ;i^5000; slaves imported, ;i^2000; carriage tax, fees,
process taxes, etc., ^2000 — producing a total net revenue of ;i^399i9. This is a
fair indication of the proportion borne by each tax during this period. — journal.
May 24th, 1763.
42 FINANCIAL HISTORY [42
cies of the tobacco trade, and the political influence of the
Royal, African Company. In short, they were of far less
importance than has been generally supposed. Direct taxes
for the greater portion of the time were the main items in
the budget, and of these direct taxes the poll tax was the
most productive. Especially for extraordinary occasions
did it constitute the principal resource, both because of the
failure of indirect taxes to respond readily, and because at
such times, as we have seen, the tobacco trade was often
completely prostrated. The two reasons why the capitation
tax was popular in the Assembly were ; first, that in ordi-
nary times it did not in an agricultural community like
Virginia, where property consisted largely of slaves' and
where land was plenty and cheap, differ very widely in
practice from the , principle of contribution according to
faculty ; and secondly, that such inequality as was produced
favored the class which controlled the legislature."^
This power of the landed tide-water aristocracy had been
very great. Yet although it was deep rooted in the customs,
traditions and law of the Commonwealth, a change was im-
pending. The old regime had been fruitful of enormous
abuses. The office of sheriff had been too often regarded as
a position of profit. Being earned by a gratuitous service
as justice of the peace, it was liable to be manipulated for
all it was worth during the short term before the next justice
in succession became entitled to the position.^ This
^ In 1756, there were 43329 white tithables, and 60078 blacks. — Dinwiddle
Papers^ February 23CI, 1756.
•^ Sir "William Keith wrote in 1726, " Land is so plenty and to be had so ver>'
cheap in America, that there is no such thing as a tenant to be found in that
country, aud this makes it impracticable to find an assembly of such freeholders in
any of the colonies, who will consent to lay any tax upon lands." Compare also
Burnabys Travels in America, 717.
■^The rule of appointment by "seniority and rotation" is well exemphfied in
petitions j^raying the favorable consideration of the executive. — Calendar Vir-
ginia State Papers, vi, 309-458.
43 J OF VIRGINIA. 43
•
mercenary estimation of the sheriff's office caused great
rivalry for the place during times of prosperity, when the
emolument was large ; but it was a difficult matter to find
men to serve in seasons of distress. Oftentimes the taxes
of several counties at a time would remain uncollected for
years. ^ And all payments being made in tobacco, extor-
tionate commutation rates for money were charged in those
districts where the crop failed or where tobacco could not be
grown, whereby great profits accrued to the sheriff.-
This malversation of office at last extended even to the
highest positions of state. The Treasurer and Speaker of the
House, after the war, loaned more than ;^ioo,ooo without
collateral security, or even personal notes,^ to his allies the
great planters, who were overwhelmed with debts to their
English factors. This man was the acknowledged leader of
the aristocracy, and being threatened with exposure and
ruin, as most of the debts were repudiated, his confederates
nearly succeeded — so completely did they dominate the gov-
ernment— in a plan to transfer all these bad debts to a pub-
lic land loan office. This was frustrated by a new party,
which found its constituency in the upland counties.* But
as late as 1769 the old party succeeded in so completely
covering up its tracks, that but for the timely death of the
Treasurer the whole significance of the land bank scheme
would never have been revealed. It was the contingent from
the hardy and energetic Scotch-Irish settlers of the Western
district, under the leadership of Patrick Henry, which now
gradually assumed the control of affairs. This party re-
modeled the fiscal system on a less exclusive basis, and pre-
pared the way for the great struggle for independence in 1 774.
The Situation in ijjo. After the conclusion of this first
' Hening viii, 201. '^ Ibid.y 381. '•'^ Journal, November 22d, 1769
*'Life of Patrick Henry, by W. W. Henry.
44 FINANCIAL HISTORY [44
war, there was a general reversion to the old system of indi-
rect taxation whenever possible.^ First of all, however, the
staple commodity could not be heavily taxed, as on it de-
pended the whole prosperity of the colony. When the war
debt was funded, it was found. that this could be done only
by enormously increasing the tobacco taxes. But it was re-
solved that this excessive tax should be gradually refunded
to the planters by means of a poll tax of 3 sh. 6 d., to continue
until 1775.'^ The only taxes which did not bear too heavily
upon the agricultural interests as such, were the customary
liquor duties, and those special taxes which we have seen
were developed during the late war. Coaches and chariots
were taxed at twenty shillings, and two-wheeled chairs at ten
shillings, by a law of 1769. Ordinary Hcenses were fixed at
twenty shillings ; and suits at law were taxed at 2s. 6d. for
the general, and is. 3d. for the county courts respectively, in
each case to be included in the bill of costs. The revenue
from these was not great; their importance here is derived
from the fact that they constituted the germs of that compli-
cated system of fees and licenses which developed later to
meet the needs of the matured state. When the United
States absorbed all the revenue from customs duties, these
excises were substituted for them. During the colonial pe-
_riod they were merely supplementary sources of revenue. "
The colony was on the eve of a struggle for indepen-
dence which would tax its resources to the uttermost. It
had made good its title to the soil against the savages, but
now it was called upon to cope with a power which fought
upon the sea as well as upon the land. Virginia had for
many years relied upon her poll taxes and the export tax
^ " It hath been found by experience that the taxes on process, ordinary vehicles,
and wheel carriages, and additional duty on slaves, and a tax on tobacco made
and shipped, are easy to the people, and not so burthensome as a poll tax." —
Hening, viii, 343 and 498. "^ Journal^ May 24th, 1765.
45] OF VIRGINIA. 45
upon tobacco. But war upon the sea meant a closure of the
market for tobacco, and other fiscal expedients became
necessary. Moreover, the poll tax, which had sufficed for
all ordinary purposes of revenue, was totally inadequate to
serve as a war tax alone. At first it had been a fairly equit-
able tax, while land was plenty and cheap, but with the
development of new conditions it had become an engine of
oppression, against which a large part of the people revolted.
Slavery also had taken a firm root in the colony, and the
workings of the poll tax had been therefore altered for the
worse. Consequently, on the outbreak of the Revolution
the old question of the poll tax versus the property tax had
to be argued anew. Then, however, the balance of power
was shifted, and the former invariable result of a victory for
the polls was less easy to attain. The ■ history of the Revo-
lutionary period marks therefore a turning-point in the his-
tory of taxation in this colony.
CHAPTER II.
^ THE QUIT-RENTS.
Origin and Developinent. The original intention of the
Virginia Company after the abolition of the communistic
arrangement was to promote the growth of an independent
yeomanry which might hold lands for a time by a metayer
tenure ; but which should be gradually changed into a gen-
eral system of peasant proprietorship. The early charters
of 1609 and 1 61 2 contain no mention of any perpetual tri-
bute ; lands were to be held in free and common socage ; and
the only rights the crown reserved were the customary fifth
part of all gold and silver discovered, with a five per cent,
duty on imports. But for some reason this scheme proved
unsuccessful, and the custom of making large proprietary
grants of land became so widespread that the influence of the
y Company itself was greatly inpaired.^ TOn the downfall of
this corporation it is probable that all the lands reverted to
the crown, but that the grantees were allowed to hold their
estates subject to a nominal rent charge, which should be a
recognition that the title to them was vested in the king.
All of the patents which were granted after 1625 provided
for a uniform annual rent of one shilling for every fifty acres,
payable at the feast of St. Michael's, but not to commence
until seven years from the date of the grant: it was also
stipulated that at least three acres in every fifty should be
cultivated within the first year. This was inserted to pre-
vent any further extension of the former grants of land to
^ Doyle, 187; Neill, Virginia Caroloru?n, 56.
(46)
47] OF VIRGINIA. 47
the king's favorites/ The rate thus established was not
changed in theory during the colonial period, but the other
restrictions were a dead letter, so that no further mention is
made of them in the statutes or correspondence of the times.
The king, moreover, was not bound by any law at that time;
and disregard of the rights of the colonists in respect of their
lands was a fruitful source of trouble, which was aggravated
by the quit-rent payments exacted of all who held sub-grants
of the proprietors.
The quit-rents were not regarded as a fiscal measure, or
a tax ; they were a recognition of the king's ultimate sover-
eignty, in whom the title of all lands was vested. They
were essentially feudal dues, "acknowledgments His Majesty
receives of the People's Tenure and Subjection."^ And as
such they were a convenient argument for the Burgesses at
various times against the chartering of new Companies,^ or
the granting of great tracts of land to the king's followers.
At such times even the fiscal importance of these rents was
conscientiously urged by the Burgesses, as for instance in
1 63 1, when the Assembly declared they ought to produce
;^2000 a year, which the king would lose by rechartering the
Company. As a matter of fact the revenue rarely exceeded
one-half of this in the hands of the royal officials. Yet the
latent possibilities of it proved a constant temptation to ad-
venturers to obtain grants which should entail such pay-
ments, from which they might by industrious exploitation
obtain a large income.
^Hening i, 228; Calendar of State Papers, Colonial Series, January, 1637;
Doyle, 187.
^ Spotswood letters.
•^ " We cannot without breach of natural duty and religion give up and resign
the lands which we hold from the King upon certain annual rents, to the claim of
a corporation; for besides our births, our possessions enjoin us as a fealty without
a salva fide alliis dominis." — Remonstrance of the Assembly, 1642; Hening, i, I^t^.
48 FINANCIAL HISTORY f^g
A grant of one-third of Virginia was made by Charles II
in 1669 to Henry, Earl of St. Albans, and others, on consid-
eration of an annual payment by them of ^^6-13-4, but
it seems not to have been accepted. The revenues of the
Crown were too small after the Restoration to tempt others
to apply for them, and we may believe that they were
scarcely worth the trouble of collection; for in 1671 the
king granted them all to a '' deserving servant," Col. Henry
Norwood ' Soon after this Lord Culpepper became Gover-
nor, and through his influence at court obtained a Royal
grant of all the lands in Virginia, including all former grants
as well. He was to enjoy all the rents and arrears of rent
for thirty-one years, and was empowered to grant parcels of
land for two shillings an acre, annual rent, payable in "■ lawful
money." The only obligation on his part was to pay forty
shillings to the king as a yearly rental.'^ This flagrant breach
of justice to all the early settlers raised such an outcry, that
agents were sent to England to protest against it. It will be
remembered that the taxes levied for this purpose were the
occasion for the outbreak of Bacon's Rebellion.
Lord Culpepper at first ofTered to surrender his claim for
;^7000 in cash, or ;^iooo yearly during his term in office.''
A compromise was then arranged whereby he abandoned all
his claims, except to the quit-rents and escheats, which latter
due had been fixed at 2d. an acre.* The most onerous con-
dition was the obligation to pay in money, which was very
scarce; but the Commissioners succeeded in compromising
this, Culpepper agreeing to receive tobacco, while the colo-
nists were to reckon it at i ^d. a lb., mstead of at the rate of
iHeningi, 572.? 11 ^''" / //
'^ Ibid., 516. Tlie 'language here is ambiguous, but it appears that more
than the mere commissions for collecting were implied.
^ Sainsbury MSS., x, 79; Burk, ii, Appendix, xxi.
*The charter of 1660 fixed these at two lbs. of tobacco per acre.
49] OF VIRGINIA. 49
2d. which had been agreed upon in \66\} The contest was
long continued, until Lord Culpepper at last renounced all
his claims in 1682, except to the lands lying in the Northern
Neck, between the Rappahanock and Potomac Rivers ; and
received instead of the quit-rents for the remainder; " ;^6oo
on the establishment of the Forces for twenty years and a
half."'^ This remained as a regular charge upon the revenue
from these sources, and was administered by the King's ofB-
cers.^ No further mention is made of it, but it is probable
that it was scrupulously exacted during the life of Lord Cul-
pepper at all events.
This semi-feudal system remained in force until the Revo-
lution without any further change, and the rents in the North-
ern Neck continued the private property of Culpepper's
heirs. In 1776 the other rents which had been paid to the
king were transferred to the uses of the Commonwealth,*
and the next year they were abolished altogether, " that
lands may not be granted on or subjected to any feudal ten-
ure, and to prevent the danger to a free state of a perpetual
revenue." The special grant to Culpepper of the Northern
Neck was however not included in either of these laws ; yet
the planters there were allowed 2 sh. 6d. currency per hun-
dred acres from the Commonwealth treasury as a recom-
pense.^ In 1779 even these were abolished, and all lands
were to be held henceforth as *' absolute and unconditional
property."^ The rents in the Northern Neck were seques-
tered for a time as held by " alien enemies."^ -^After the war
they were reimposed ; until 1785, when an act ''was passed
almost unanimously" which abolished them forever.^
^ Hening ii, 31 ; Burk, ii, Appendix, xxviii and xlv.
2 Virginia Historical Register, vol. iii, § 14; AIcDonald AISS., vi, 299.
^ Sainsitiry AlSS.y xi, 17 and ix, 108.
* Hening, ix, 127. ^ Ibid., ix, 359. ^ Ibid., x, 64. 'Ibid., xiii, 113.
^Madison's Letter, December 24th, 1785.
■i-
^O FINANCIAL HISTORY [50
Administration and Fiscal Importance. These quit-rents,
which were in ordinary times the only land taxes in the col-
ony, were collected and accounted under the direction of a
special officer who was responsible to the king, and in no
way constituted a part of the colonial financial system. This
official was known as the Treasurer at first, and received
;^500 a year for his services ;' but when the Assembly gained
the right to appoint a treasurer for its own funds, he was
called the Receiver General, and an Auditor was appointed
to keep the accounts. The salary of both was fixed at a
percentage commission on the receipts amounting to above
fifteen per cent. The sheriff was the local collector, and was
accountable for his funds to these officers, receiving a commis-
sion of ten per cent, for his services."^ This revenue was gen-
erally farmed out by the Receiver General to some councillor,
and was collected in tobacco or transfer notes,'^ although it
was lawfully due in money of the realm. This tobacco was
then sold at '* easy rates," to the Governor, or some member
of the Council for money, by which operation the law was ful-
filled, and the officials received a fat perquisite as well."*
The fund was so small after the abandonment of Cul-
pepper's Grants, that the Commissioners of the Customs,
in informing the Lords of the Treasury as to the colonial
1 Henihg i, 306, ii, 31. ^ Blair and Chilton.
3 The rate at which tobacco was received in lieu of money was fixed from time
to time, and shows a steady decline in the price of that staple. In 1619, it was
3 sh. and i sh. 6d. a lb., according to <\\XQ\\tY.— {Journal, 1619,) 1645, 3d.
[Hening, i, 316]; i66r, 2d. (Hening, ii, 99); 1676, i, 5d. (Burk, ii, Appendix,
xlv); 1682, I, 2d.; {Census 1880, sketch by R. A. Brock, Esq.) [Hening, ii,
506]; 1697, id. (Blair and Chilton.) During the iSth century the customary
rate was one penny a pound.
*The governors discouraged the use of money, as they could buy their sup-
plies cheaper in tobacco. An ox which was worth 50 sh. or ;^3, he could buy for
600 lbs. of tobacco, which cost him only 4 sh. or 4 sh. 6d. a hundred weight, and
so he would save about zp% on his purchase. — BLiir and Chilton, 1697.
ci] OF VIRGINIA. 51
revenues in 1692, forgot to make any mention of the quit-
rents at all.^ Various statutes were passed during the 17th
century to enforce the payment of these rents, and induce-
ments were offered for the prompt settlement of arrears by
compounding them for double \^ but still the ** great neglect "
continued — even the penalty of absolute forfeiture of the
land for non-payment for three years did not prevent the
receipts from decreasing year by year. In 1 631, the Bur-
gesses affirmed it would produce i^2000 a year *' if duly
collected," but nearly a half century later, when the popula-
tion had increased eight-fold the revenue was but ;^I500,^
and in 1690 it was only ;^8oo/
This proved to be the low water mark, however, for with
the advent of Governor Spotswood there was a considerable
reforrri in the system. When the sheriff received ten per
cent, for collection, the Receiver General seven and a half
per cent, for holding,^ and the Auditor eight and a half per
cent, for accounting the rents ; and when such as were paid
consisted of "trash tobacco " which, poor as it was, was sold
at '*easy rates" to the inside members of the magic circle
for current money ; and when this fund, if drawn upon in Eng-
land, had to be discounted nearly twenty-five per cent, be-
low the sterling money of the realm ; the wonder is not that
the receipts were small, but that they amounted to anything
but a deficit by the time they reached the Crown. The first
step in reform was to abolish the established custom of sell-
ing the tobacco "by inch of candle " to the members of the
Council.® It was ordered that henceforth it should be
vended by the Auditor at private sale for more remunerative
^ Sainsbury MSS., pkg., iv, 57. • '^ Hening i, 351, iv, 79.
■ Burk ii, Appendix, xxi. * Blair and Chilton.
' Virginia Historical Register, iv. Col. Wm. Byrd held this office for seven-
teen years at seven and a half per cent, on the receipts.
^ Spotswood LetierSy 1 610.
52 FINANCIAL HISTORY [52
rates. At the same time the penalties for non-payment of
the rents were made more stringent. Another evil of the
old system was " due in a great measure to the pernitious
(tho' antient) practice of discharging all public debts by
Tobacco paym't. This has been — the Governor declared —
the occasion of making all that Trash, w'ch hath clog'd the
market — many people making it for no other end than to
pay off Debts and levies, for which purpose they think it
good enough, how mean soever it be."^ This was remedied
by an offtcial inspection of all tobacco which was brought to
market ; and it was from this beginning that the elaborate
system of transfer notes was developed.
Besides all this. Governor Spotswood affirmed that for
years no regular accounts had been kept,^ — that all charges
had been reckoned in crowns sterling, while the sales were
computed in current money, whereby a profit of over nine-
teen per cent, accrued to the officials — and that there had
been systematic collusion between the Receiver General and
the Burgesses to defraud the Crown, All of these evils were
remedied so far as possible, often in spite of some opposi-
tion on the part of the people. And Governor Spotswood
informed the Lords of Trade that '' The Scheme for
improving His Majesty's quitt rents is likely to answer fully
my expectations, — the Public Credit which was one main
end thereof being now raised above 200 per cent."^ The
revenue from this source was indeed increased for 171 5-16
to about ;f 1900, the average for five years having been but
;^iioo;*but it was not maintained, and the rents soon fell
into neglect again.
Decline and Disappeara^tce. In 171 7 the Governor com-
■ Spotswood Letters.
'^Ibid.,n, 176. In 1711 over 10,000 acres of land were found to have been
fraudulently exempted. — Letters, July 28th, 1711. '* Ibid., March 28th, 1715.
* Ibid. Oldmixon declares the yield in 1703 was ;(^I200.
53] OF VIRGINIA. 53
plained once more that three milHon acres which should
have paid ;^30do, did not in fact produce a half of it ; that
it cost ten to fourteen per cent, to collect these rents ; — and
that the officials indulged the planters by accepting
tobacco at one penny a pound *' which was not worth the
half of it." This habitual neglect and fraud continued
during the whole colonial period; for as late as 1755 a-
law was passed which declared it to be almost impossible
to obtain a judgment against a sheriff for the non-pay-
ment of the rents collected. The county courts were com-
posed of landlords, and they were l6th to render a de-
cision in such cases ; so that, even if collected, the Crown
oftentimes could not obtain the proceeds from the sheriffs or
collectors. By 1738, the revenue from this source was esti-
mated at about ;^3 500,' although it is doubtful if the actual
proceeds ever reached that amount. The tax became more
and more unpopular with the people, and proved more diffi-
cult to collect with the spirit of opposition to the rule of
Great Britain.
The opposition to the quit-rents on the part of the colony
was threefold in its nature. The first reason was because it
was a land tax which, though small, was unpopular with the
landed aristocracy. Secondly, the early forms of it required
payment in money, which was extremely scarce and was al-"^
ways at a considerable premium. At several times the peo-
ple openly refused to pay in this way — the assembly even
passed a law providing for payment in tobacco, and refused
to repeal it at the Governor's request. But after "boldly
disputing" his right to demand money, they became more
humble, and petitioned for commutation, which was granted
at the rate of a penny a pound.' The third reason for its
' History of the British Plantations in America, by Sir Wm. Keith.
■^ McDonald MSS., November 20th, 1685.
54 FINANCIAL HISTORY [54
unpopularity was that the quit-rents constituted a fund which
was beyond the control of the Burgesses, and served to give
independence to the royal officials/ During the Common-
wealth, the fund seems to have been devoted to the regular
governmental expenses.'^ The opposition to a return to the
old system after 1660 was so great that the sherifTs would
not collect the rents, and a law had to be passed to compel
them to serve.^
During the seventeenth century the English sovereigns
seem to have been willing to allow the proceeds of the quit-
rents to remain in Virginia, as a resource for extraordinary
occasions. No drafts were made upon it, and upon petition,
grants were allowed by the king in aid of the regular in-
come. In 1698 we find ^^295 5 granted from it toward pay-
ment of general expenses, the petition of the Receiver Gen-
eral declaring it " hath been usual in the like cases."* And
a' few years later there was nearly ;^6ooo in the Auditor's
hands.^ But several changes soon ensued : Governor Spots-
wood reformed the system and compelled a more prompt
settlement in good tobacco ; there was considerable distress
in the tobacco trade, and the distaste for direct taxes was in-
creasing. Finally, the pohcy was inaugurated by the Crown
about this time, of drawing upon the quit-rent fund as fast as
it was paid in^ — nay more, it was often overdrawn, as in
1 714 when ^^"3000, three times the annual revenue, was
called for. The receipts from the two-shilling export tax
were exceedingly small during that year, and the matter was
brought to a head when the Assembly petitioned that the
quit-rent fund might be devoted to the regular charges of
government for the time being. This request was ignored,
1 Sainsbury MSS., xi, 231. '^ Hening i, 306.
^ Hening ii, 83. * Calendar Virginia State Papers, i, 58-177.
^ Virginia Historical Register^ iii, 14. ^ Spolszvood Letters, June 2nd, 171 3.
^^j OF VI RG TNI A. 55
whereupon the Burgesses repeated it,^ enforcing their de-
mands by a resolve to lay no more taxes until an answer was
returned.'^ It was a curious struggle, partly constitutional,
yet tinged with personal interests. The Governor seems to
have been wiUing to concede the request of the legislature,
but in a letter to the Council prayed earnestly that an answer,
if favorable, should be returned to him, so that he could use
it with proper effect upon the Burgesses."^ It is probable
that the Assembly won its way for the time, for a donation
of £z^o is recorded out of the quit-rents. The constitutional
question, however, was left as undecided as before.
Thus the matter rested for a time, but the opposition was
often quite violent on occasions, as in 1 716, when an at-
tempt was m.ade to draw up a new and more complete rent
roll than one made about the middle of the previous century.
It was as a partial consequence of this struggle that Colonel
Ludwell was dismissed from the office of Receiver General, be-
cause he refused to yield to the Governor's request for fuller ac-
counts and stricter methods. The Crown, however, strictly
maintained its rights in the matter, although they were ques-
tioned once more in 1719.* Donations were made from time to
time toward the support of the college, as had been done in
1692 and 1726;^ or in 171 7 to eke out salaries of various
officials and pay war expenses, but these were merely as
' Journal, October 24th, 1715.
- " Upon a diligent search of Precedents here the like deficiencies were formerly
made good, We find it has always been out of the Fund of the quit rents Which
used to be received in this Countrey ready upon all such occasions, and proved
exceedingly Serviceable in cases of Sudden emergency, 'till about nine year ago
(1705) they were called in to the Exchequer in England — So there is no obtain-
ing them but by repeated applications to the Throne, wch cannot be made with-
out great charge and difficulty." — Calendar of the Virginia State Papers, pg. 177.
^ Spotswood Letters^ 1715- * Ibid.^ March 25th, 1719.
^ Blair and Chilton, and Virginia Historical Register, iii.
J 6 FINANCIAL HISTORY [-5
marks of royal favour.' After the second decade of the cen-
tury, but little mention is made of these rents. That they ex-
isted, however^ is shown by a law of 1755, which declared that
treasury notes would not be receivable in payment of such
dues. It is probable that the growth of the colony, especi-
ally the development of the western country, and the general
opposition to all interference on the part of the Crown, led
gradually to the abolition of these feudal dues as one of the
first measures of the Revolutionary Assembly. It had served
as a very convenient excuse for the exemption of all the land
from taxation ; the revenue from it was not sufficient to
make it a fiscal resource of any importance ; so that with
the growth of the democratic and independent spirit of the
Virginia patriots, it was gladly swept away. Its history is
interesting, as it v/as one of the few examples of feudal insti-
tutions which have ever survived for any length of time on
this continent. It shows the essential difTerence in social
ideas which divided the North from the South, but it per-
ished with all other minor dififerences through the growth of
a national spirit.
^ John Davis, Travels^ 390.
CHAPTER III.
CUSTOMS DUTIES.
History of the Tax iip07i Tobacco Exported. The govern-
ment of Virginia manifested a great interest in the prosperity
of the tobacco crop from the earHest days. It was plain to
all that the welfare of the whole colony was inseparably
bound up with the rise or fall in the price of this staple com-
modity. The histories of the time abound with examples
of interference with the affairs of the settlers, either by an
absolute prohibition of planting, by limitation of the amount
which could be raised, or by regulation of the price which
should be demanded. Yet for many years the possibility of
deriving a direct revenue for the support of the state from
this source, was not recognized. As late as 1654, an act
was passed which granted a free export of tobacco, subject
to no '' taxe or custome whatsoever."' Indeed, the primary
consideration in a tax of this nature, was by no means
merely fiscal. The causes of the first duty on tobacco were <
threefold ; first, in order that they might with '' most honor
& ease support the government in well paying of its
ofhcers;" .secondly, "as means perhaps of introducing
money;" and finally as " an encouragement to men to pro-
duce other usefull and beneficiall commodities." The last
consideration was closely allied to the customary policy of
the early Virginia Company, which had always been to
direct the attention of the planters to other crops of more
"staple" products. They wished to avoid a concentration
^ Hening i, 413.
(57)
5 8 FINANCIAL HISTORY [^8
of all interests in one direction, as it involved the danger of
famine and distress which are always attendant upon the
cultivation of a single crop.
In conformity with these principles, a shilling a hogshead
was levied in 1657 upon all tobacco exported, to be ac-
counted by the masters of vessels.^ This revenue was to be
devoted to the payment of the Governor's salary of ii^6oo,
for which at this time the Assembly was solely responsible.
This tax does not seem to have been very satisfactory, for
it was repealed the following year, because '' certaine incon-
veniences have been found in the manner of collecting to
which an apt remedie could not be applied." The next
year it was reimposed at ten shillings per hogshead upon all
tobacco not exported to England.'' This was a prohibitive
tariff directed against the Dutch, as was also an act of 1657.
It was not intended to produce revenue. The mother
country was contesting for commercial supremacy upon the
sea, and the colony was bound to lend its aid to the project.
This act of 1658 remained in force for some time, although
the New England vessels were exempted from the duty in
1665. This was done because the act had "drav/ne much
trade into Marryland," the lower duties upon tobacco there
operating as a bounty upon the export of tobacco.
The policy of the colony in taxing tobacco to this time had
been rather political than fiscal in its nature. It was merel}-
incidental to the general colonial policy of Great Britain.
The first duty which was laid for revenue purposes pri-
marily wa^that of 1661, when a tax of two shillings a hogs-
head was imposed upon all tobacco exported from Virginia
Collectors were appointed by the Assembly ; they were tw
receive salaries of ten per cent, on their receipts, and all the
machinery of administration was to be subject to the control
^ Hcning i, 410. "^ Jbid., 498, 523 and 536. '^ Ibid, ii, 130.
C^gl OF VIRGIXIA. 59
of the legislature. The revenue was to constitute a fund
from which the regular expenses of government were to be
defrayed, since the Assembly had accepted the changed con-
dition of ofhcers in England, and assented to the return of
Governor Berkeley upon the. old terms in force before the
Commonwealth. This law is the pattern from which all the
later acts were copied ; and the nominal rate therein estab-
lished remained constant for a century and a half. It was
supplemented by an act of 1663, providing that duties
should no longer be receivable in " refuse contemptible
goods," but must be paid in money or good tobacco.' Be-
fore long the planters tried to evade the tax by exporting
their tobacco in bulk, so that the duty of two shillings was
likewise laid upon every 500 lbs. so shipped."^ Beyond this
there was little change in the form of the duty, the only
"modifications being to secure a more complete return from
shipmasters, in order to prevent smuggling. It was re-
enacted in 1705, and from time to time until the Revolution,
the rate being two shillings per hogshead.^
We have seen from a study of the quit-rents how^ the price
of tobacco tended to decrease during the seventeenth and
eighteenth centuries : some compensation had to be made for
this, else would the tax have become exceedingly onerous if
the nominal rate of duty had not been reduced in some way.
The cask or hogshead, which at first was fixed at 500 lbs.
weight, was finally increased to nearly double, viz. 900 lbs. net,
which of course was tantamount to a reduction of the rate,
the charge per hogshead being constant. In 1769* the rate
was reduced to i sh. 6d. for two years; it should be noted,
at just the time when the poll taxes were being continued at
a high level to pay off the war debt. The reason for this
^ Hening ii, 186. "^ Ibid., 413.
3 Ibid, iii, 344, and vii, 77-259, -:,2>Z' * Ibid, viii, 345.
X
X
6o FINANCIAL HISTORY T^q
seeming inconsistency was, however, that other duties had
become necessary upon the export trade, in order to com-
pensate sufferers from losses by fire and flood in several of
the tobacco warehouses. It must be remembered that' the
Commonwealth was responsible for all tobacco stored in
these public warehouses, for which transfer notes had been
issued, so that these various losses often constituted a con-
siderable charge upon the budget. Then again there had
long been^ a duty of i d. a lb. on tobacco for the benefit of
the College of William and Mary, which was a public insti-
tution in many respects. This it is true did not yield a very
considerable revenue, but it was at least a figure upon the
statute books, and was an argument against the further in-
crease of the customary duty upon tobacco.
In 1776, it was enacted that '' all duties and taxes shall
cease to be collected upon any tobacco to be shipped from
this country."" Moreover all exports to Great Britain were
forbidden, and bonds of ;;^iooo were required of every ship-
master that he would not land his cargo in any part of his
Majesty's kingdom. All liability of the State for losses of
tobacco in any warehouses was removed, and the way cleared
for a reorganization of the whole system. At the following
session of the assembly the rate of duty upon all tobacco ex-
ported was fixed at ten shillings per hogshead.' This war
rate corresponded to the various taxes which were laid at
the same time ; but the French West Indies were at first ex-
cluded from the provisions of the act, by reason of the treaty
with France.* This was, however, settled by agreement in
1779, so that when the duty was raised to thirty shillings dur-
ing the next year it was applied to all exports uniformly."
The purpose seems to have been to direct the planters rather
^ Hening ii, 429, 692; vi, 91. '^ Ibid, ix, 162. ^ Ibid., 350.
*'Ibid., 551. ^ Ibid, x, 13.
6i] OF VIRGINIA. 6 1
to the cultivation of necessary commodities by making this
tobacco trade unprofitable. There was great scarcity of the
ordinary food supply ; and at one time salt was urgently
needed, so much that free export of one hogshead of tobacco
was allowed for every five bushels of salt imported.^
This ruinous rate of thirty shillings was not maintained "^
throughout the war. It was clearly prohibitive, except so
far as smuggling was concerned. And after the cessation of
hostilities the colony was so completely prostrated that
every effort was directed toward a removal of all restraints
upon the revival of international trade. There was no longer
danger of famine ; the embargoes had been raised, and the
encouragement of the staple industry was the surest way to
prosperity. Consequently the rate of this duty was reduced
to eight shillings in 1781, and again to four shillings two
years later. The Confederate Congress made a requisition
upon the Commonwealth in 1787 for $90,000, and six shil-
lings additional was levied to raise this money. But the
repeal of the requisition following shortly afterward, the pro-
duct of this extra tax was transferred to a newly created
sinking fund.^ It lasted but a year, and the general ten-
dency remained as before in favor of a reduction of the
tobacco duties as speedily as possible.
After 1789, all duties upon commerce were forbidden to ^
the separate states, and it became necessary to recognize a
new principle, if this charge were to be continued. The in-
spection of this staple was still necessary in order to main-
tain its price abroad, although the old tobacco currency had
fallen into disuse. And the expenses of storing, weighing
and inspection were considerable. Therefore, the old duty
was reimposed at six shillings a hogshead, and so continued
until 1809, when private inspection was authorized instead.'
^ Hening x, 149. 2 jn^^ ^ii, 288, 453. ^ Shephard's Statutes, 1809, 55.
62 FINANCIAL HISTORY [62
The charge was then fixed at $1.75 a hogshead, but it was
merely as a fee to cover the cost entailed. This fee was
also probably for a partial guarantee against loss by fire, and
may be regarded as an insurance premium/ We shall see
later, that with economies in the methods of inspection this
fee inadvertently developed into a real tax, yielding upwards
of $18,000 a year, so that it had to be reduced to conform to
the provisions of the Constitution of the United States.'^
The Fiscal Importance of this Tax. What part did this
duty play in the colonial budget? How much revenue did
it produce? It must be remembered that it was first laid at
a time when the Assembly was responsible for all the charges
of the government, and when it could itself regulate the
amount of its expenses, the Governor being its creature.
Then came the Restoration, and the return of the old Royal
officials, whose salaries had to be paid in some way. The
Assembly therefore extended this novel revenue during the
next few years, and it served henceforth for the support of
the Royal establishment. It was devoted exclusively to this
purpose, was granted to the king, and was audited by the
Royal officials.^ In 1671 about 15-20,000 hogsheads were
exported yearly, which would be equivalent to ;^I500 or
more.'' Of this the Governor received i>'i200 and the Coun-
cil i^350, so that deficits in the fund were not infrequent.
During the next thirty years the gross revenue amounted to
^ The old liability for losses in the public warehouses had been resumed with
the rehabilitation of the tobacco currency. A tax of three shillings a hogshead,
for instance, was levied for several years to cover a loss at Rocky Ridge in 1785.
— Hening xi, 393.
^ Calendar Virginia State Papers, July 21st, 1789.
^ McDonald MSS., October loth, 1676.
*Burk ii; Grahame's Rise and Progress of the Utiited States; Hening, ii, 516,
and Chalmers' Political Annals.
53] OF VIRGINIA. 63
;^2-3000 annually.^ The export varied enormously with the
accidents of the season, but it averaged 30,000 hogsheads
during this period,^ which at two shilHngs would produce
about i^3000.
During the eighteenth century the revenue did not increase
very rapidly. The second decade was even marked by a
considerable deficit in the public revenues. This was owing,
so far as this export duty was concerned, to the low price of
tobacco which prevailed from 1705 to 1714, and which
greatly discouraged the foreign trade.-^ There was also an-
other reason, namely, the exemption from all duties, of goods
shipped in Virginia vessels. As the Governor explained the
matter, *'the Revenue must necessarily decrease the more
the Inhabitants fall into Trade, seeing their Vessels are ex-
empted from paying all those Duties by w'ch it is rais'd."*
Oldmixon states that even as late as 1734 the revenue from
the export tax was only ^^3200,^ and Governor Dinwiddie,
twenty years later, complained that this two shilling tax did not
even suffice to pay the regular salaries.*' This last instance,
however, was probably due to the exigencies of the French
and Indian War, which prostrated all foreign commerce. It
seems as if the revenue ought to have been considerable,
for the exports of tobacco nearly doubled after 1750, being
40-50,000 hogsheads on the average, and sometimes exceed-
^ The product was £2']^i in 1675. S^McDonald MSS.'\ In June, 1676, £2yj1
was paid from the fund. \_Sainsbury MSS.'] In 1688 ^3731, and 1696 ;^2500.
[Idid.'] By 1697 it amounted to ;{!'30C0, but the shipmasters received ten per
cent., the collector ten per cent., the auditor seven and one-half per cent., and
the salaries themselves were ;i^25(X) a year.
2 Oldmixon; TentA Census, History of Tobacco, by R. A. Brock, Esq.
' Calendar Virginia State Papers, i, 177, and Sainsbury MSS.
* Spotsivood letters, October 24th, 171 5.
^ Keith's History of the British Plantations gives a similar revenue in 1 738.
*• Dinwiddie letters, i, 343.
64 FINANCIAL HISTORY [^^
ing 60,000.^ After the war the product of this tax was com-
puted in the budget at ;^5000, and probably remained near
that figure until the Revolution. The fees and expenses of
collection were very large, and all of the remainder, the net
revenue, was devoted almost exclusively to the payment of
salaries, since the Assembly, it will be remembered, relied
upon other taxes for its contingent expenses.
We have seen that although the revenue from these to-
bacco duties was not more than sufficient to maintain the
Royal offipials, yet since for many years the salaries consti-
tuted the principal charge upon the budget, th& export tax
upon tobacco was the only indirect tax which was of any
great fiscal importance. It will be interesting therefore to
see whether it was a profitable expedient for the assembly to
employ in lieu of other t^xes. Tobacco was a luxury; it
commanded a high price ; and the only important rivals of the
Southern colonies of America in the European markets were
the Spanish possessions, so that for many years the trade
was very profitable to the planters. But the sovereigns of
Great Britain soon perceived this fact, and proceeded to suck
as much profit from it as could be attained. The whole his-
tory o.f Virginia is filled with discussions and complaints of
the policy of England in this regard from the time of the
memorable contracts of James I to the Revolution. Peti-
tion after petition was sent to Parliament asking foi relief,
either by the grant of free export to Continental countries,
or by a reduction of the existing duties on tobacco in Eng-
land. The revenue of Great Britain from tobacco duties was
enormously increased after the Restoration, and by the mid-
^ The exports of tobacco in 1740 amounted to about thirty thousand hogsheads,
which would produce but ;i^3COO. (f/. S. Census^ 1880.) In 1759 fifty to sixty
thousand hogsheads were exported. (Burnaby's Travels^ In 1 758 they amounted
to seventy thousand hogsheads. See also Dinwiddle Papers^ October 25th, 1 754.
65] OF VIRGINIA. 5^
die of the eighteenth century was about ;£"3-4OO,O0O a year.^
When it is considered that about 6d. a lb. custom duty was
charged in England, that no tobacco could be exported else-
where, that it cost about £6 a hogshead to ship it from
Virginia to the market,- and that the proceeds were gener-
ally returned in goods upon which la considerable profit, be-
sides all freight charges, was laid, — it will appear that this
trade was sufificiently burdened without adding another ex-
port duty of two or even six shillings a hogshead upon the
tobacco from Virginia.
All of the contemporary writers tell of the frequent distress
occasioned by this combination of restraints, especially af-
ter 1700. In 1685, many hogsheads of tobacco were sold at
twelve pence apiece, it is said, rather than pay the various
duties and freights."^ Upon the accession of James II the
duties had been considerably raised "in a warm fit of loy-
alty," so that even the Governor was forced to admit that he
had observed '* since ye additional duty hath been laid on
tobacco, many seem to be discouraged, either from shipping
present or planting future crops."* It was furthermore al-
leged that even before the increase of the duty, tobacco had
often been sold at a loss. We are told again in 1724^ that
^ Oldmixon, 320; Grahame's Rise and Progress of the United States; also
Burk, iii, 136; McDonald Papers, y,-^. i,and YizWs History of the English Customs.
2 The prices for tobacco in Virginia in 1732 were from two to three and one-half
pence a pound, while it sold for seven pence in England. The incidental charges
per hogshead had been only about seven shillings eight pence in 1694, but during
the eighteenth century contemporary accounts show that the net proceeds were
ridiculously low. For instance one shipment of six hogsheads, averaging nine
hundred to one thousand pounds each, yielded to the planter but ;^i5-2-8 net. It
will be clear that such profits could not withstand a great deal of discouragement
without being swallowed up entirely. — U. S. Census 1880, History of Tobacco, by
R. A. Brock, Esq.
^Oldmixon, 263. * AIcBonald MSS., November 14th, 1685.
^ A frequent practice was that of " running tobacco, or entering all light hogs-
heads at importation (into England), which in their language is called 'Hickory
^^ FINANCIAL HISTORY [66
the losses upon tobacco were frequently very heavy, and the
expedients for avoiding payment of the duties were many
and intricate. Twenty years later the Assembly represented
*' the distressed State and Decay of our Tobacco Trade occa-
sioned by the Restraint on our Export, which must if not
speedily remedied destroy our Staple,'" and they prayed for
*' a free export of their Tobacco to foreign Markets directly."
Yet the colony was not completely at the mercy of Great
Britain, for despite their greed the English sovereigns were
limited by their own policy in the exactions which they
could demand. They dared not tax the tobacco trade too
heavily.^ Governor Spotswood, for instance, relating that in
one of the best tobacco counties there had been a great
deal of hemp and flax raised, which had been made into
cloth, added, *' it is certainly necessary to divert their Appli-
cations to some other Commodity that may be beneficial, or
at least less prejudicial to the Trade of Great Britain."^
This then was the only restraint which was put upon Eng-
land in furthering her colonial policy. Tobacco was surely
the safest crop which Virginia could raise ; and so it was
taxed to the utmost limit, which would not divert her atten-
tion to products which competed with British commodities
in foreign countries.
In view of all these facts it seems at first sight that the at-
tempt to raise a revenue from the tobacco exports was merely
to overload a sinking ship. But, as was urged again and
puckery,' and then again by getting a debentury for tobacco that has been run,
or entering all heavy hogsheads for exportation, which they call ' Puckery hickory,'
after which it is said that the same tobacco has been tunned into some neighbor-
ing port." — ''^Present State of Virginia^^ Hugh Jones, A. M.
^ " It must be owned that the Multiplicity of Duties, Drawbacks, Bonds and
other Regulations of the Customs, wherewith that Trade is perplexed, has in a
Manner forced the Merchant into many little Contrivances which in all proba-
ability would otherwise never have been thought on." — Keith's History of the
British I'lantations in AmSrica, London, 1738.
'^ Burk iii, 136. ^ Spotsivood Letters^ May 20th, 1710.
^yl OF VIRGINIA. ^j
again, there was no power to levy import duties, and there
was but one export of any importance. Consequently this
was taxed, the people meanwhile deluding themselves with
the notion that because the tax was not taken directly
from their pockets, it was paid by the foreign buyer. The
only 'Justification for the duty on fiscal grounds was perhaps
that the tobacco trade would have been taxed to the verge
of destruction in any case, that being the express policy of
England, and therefore that Virginia might as well get what
was possible from it herself, else it would be taken at the other
end of the line. This export duty was common to most of
the southern colonies, and perhaps under the circumstances
it was as good an expedient as could be devised for deahng
with the mother country. Its tendency, at all events, was to
equalize somewhat the distribution of public burdens, since it
fell with particular severity upon the planters who favored
themselves, as was natural, perhaps, in every other way. But
at the samxC time the revenue was exceedingly variable ; it de-
pended upon the most uncertain factor of all things earthly,
the weather ; it was conditioned by the particular fiscal needs
of the Parliament in England, and was moreover liable to
complete destructicTn by any change in the foreign policy of
that body, which might bring on a war or open the way to
commercial competition from the Spanish rivals in the to-
bacco trade. Thus it was good so far as it went, but it will
readily be seen that it was ill adapted to serve as a fiscal
basis for a developed state. Other more stable taxes were
necessary, and there was but one of these which the Bur-
gesses would allow.
The Import Duty tipon Liquors. The Virginia Company
by the charter of 1606 was allowed to take provisions, arms,
ammunition and clothing from England duty free for a period
of seven years,^ and was also granted the right of imposing
1 Hening i, 63.
68 FINANCIAL HISTORY
certain import duties upon these goods in Virginia. The
letters-patent given to Sir Thomas Gates conferred authority
*' to take and surprise by all ways and means whatsoever all
and every person or persons which shall be found trafficking
into any harbour or place within the limits of the said
colony until they, being of any realms under our obedience
shall pay two and a half upon every hundred of anything so
by them trafficked ; and being strangers, until they shall pay
five upon every hundred of such wares and merchandises ;
which sums of money during the space of one and twenty
years shall be wholly employed to the use, benefit and be-
hoof of the several plantations ; and after the said one and
twenty years ended, the same shall be taken to the use of us,
our heirs and successors."^
The charter of 1609 continued this grant at the higher
rate of five per cent, respectively for twenty-one years, but
reserved the right to impose duties of five per cent, on all
imports into Great Britain, which privilege was reenacted in
the third charter of 161 1. For many years after the aboli-
tion of the Company the possibility or expediency of impos-
ing duties upon imports seems not to have been noticed.'^ It
is doubtful indeed if any power was recognized by Great
Britain. No mention of such a right is contained in the
charter of 1676. It was only after the enormous extension
of this method of raising a public revenue by the Long Par-
liament of Great Britain'' and its successors, that this scheme
for lessening the poll levy was devised. In the meantime the
new commercial policy of Great Britain was inaugurated,
which imposed very considerable limitations upon the power
of the Colonies to tax their imported commodities. A stat-
ute passed in 1663 continued the policy of Cromwell, pro-
^ Alex. Brown, Genesis of the United States, p. Co. - Hening ii, 531.
^ Hubert Hall, Customs Revenue in England, i, 180.
69] OF VIRGINIA. 69
hibiting the colonies from receiving any goods except from
English vessels ;' and an act of 1672 effectually prevented all
exchange of goods between the colonies themselves. A
duty of 6d. a gallon for rum and id. a pound on sugar was
imposed in 1661, though rather as a sumptuary act'^ than for
purposes of revenue. But it proved difficult to administer
and was repealed a year after going into effect, principally
because of *' the obstructions it may bring to the trade of the
country.'"^
For twenty years there w^as no further mention of import
duties of any kind, and Governor Berkeley reported in 1671
that " no goods either exported or imported pay any the
least duties here, only two shillings the hogshead on tobacco
exported."* The next mention of any duties upon im.ports
is contained in the instructions of Francis, Lord Howard of
Effingham, who was sent over as Governor to succeed Lord
Culpepper. He was therein advised to '* recommend to the
General Assembly the consideration and settling of such a
way of raising m^oney upon necessary occasions as shall be
more equal and acceptable to our subjects than the present
method of levying the same by Poll of Tytheable :''^ and the
suggestion was made that an import duty on liquors be im-
posed. Beyond this there seems to have been no authority
to lay such a duty, for no previous charter contained any
provision for such an act. We may suppose that this
recom.mendation was favorably received, for in the next year
a duty of 3d. a gallon was levied on "wines of all sorts what-
soever, brandy, rum, or any other spirits, imported,"** for the
iiSCar. II, 17. V
- The preamble of this act recites that " WTiereas the excessive abuse of rum
hath by experience been found to bring diseases and death to diverse people, and
the purchasing thereof made by the exportation and unfurnishing the country of
its owne supply and staple commodities; It is enacted," etc. — Hening, ii, 128.
^ Hening ii, 212. ■* Ibid.^ 516.
^ McDonald MSS, October 24th, 1683. ^ Hening iii, 23.
70 FINANCIAL HISTORY [70
Special purpose of building a new Court House for the sit-
ting of the General Assembly. This act was to continue in
force for three years ; collectors were appointed to be re-
sponsible to the Assembly, and the extreme penalty of for-
feiture of the vessel and furniture was imposed for neglect to
report to the collectors before breaking bulk. All vessels
built in Virginia, however, were to have a free entry for their
cargoes. This act was continued till 1691, and raised about
;^6oo a year on the average.^ At that time the rates were
changed somewhat, 4d. a gallon being levied upon all liquors
imported by foreigners in foreign-built ships, while but 2d.
was charged for such ships as were owned in Virginia, in
which the importer had an interest. Virginia-built ships were
to be exempted from the operation of the law." Four years
later when the act was continued, the home 'government as-
sented to it only on condition that all liquors coming directly
from England, Wales, or the town of Berwick upon Tweed,
should be exempted from the duty, the intention being to
draw all the revenue from the trade with the Spanish West
Indies. At^the same time the rate was made uniform at four
pence a gallon. In 1699, ale and beer were taxed for the
first time at one penny a gallon.^
The revenue from this source was now quite an item in the
budgets, since it produced ;£6oo a year, nearly a quarter of the
product of the duty upon tobacco exported.* The Burgesses
in 1705 declared its operation to have been " very usefull and
advantageous, and that no better expedient can be found to
defray the charge of any publick design than impositions of
that nature." Rum, brandy, and spirits were rated at six
pence the gallon, except from the West Indies, for which the
rate was fixed at four pence ; wines were taxed lour pence a
1 Burk ii, Appendix, xxi. "•' Hening iii, 88. ^ Ibid., 129-188.
* Oldmixon, 298, and Calendar Virginia State Papers, i, 124.
71 ] OF VIRGINIA. . 'J I
gallon in all cases, and cider, beer,, and ale paid one penny
a gallon. All liquors from England were to come in free of
duty. This act expired by limitation in 1707, and there is
no further record of a reimposition of any duties upon
liquors or slaves for nearly twenty years. Nevertheless we
have proof that the acts continued in force, for Governor
Spotswood reported in 1718 "the greatest Bank of money
known, — arisen by duties laid by Foreign Importation."'
He affirmed that the duty upon liquors and slaves together
had, during eight years, built a house for the Governor, as-
sisted North Carolina in an Indian war, fortified the frontier,
built magazines, and helped to build a church, there being
still £i'/^'j2 left in the bank."^ Much of this undoubtedly
came from the duty upon slaves, but it is probable also that
the imports of liquor were very considerable in amount.
The influence of the Royal African Company in 1705
caused a veto of the slave duty by the Crown, but Governor
Drysdale informed the Assembly at that time that ** a duty on
liquors being expressly recommended in my instructions, if
you think fit to enact it by itself I am persuaded it will meet
with approbation at home."'" In pursuance of this recom-
mendation the Burgesses imposed a duty of three pence a
gallon upon rum, brandy, wine, and spirits; and one penny
a gallon on ale and beer to constitute a general fund for ap-
propriation by the assembly. At the same time an addi-
tional duty of one penny a gallon was levied for twenty-one
years, from the proceeds of which ^200 annually were appro-
priated to the use of the College of William and Mary, which
had previously been supported by occasional grants of money
from the quit-rent fund. These duties were continued from
time to time* at the rate of three pence a gallon, for twenty
' Letters, April 23d, 1718. ^ Spotswood Letters, May 26tb, 1 719.
' Virginia Historical Register, 1850, vol. iv.
* Hening iv, 142, 276, 310, 394, 470; v, 26, 162, 236.
72 ' FINANCIAL HISTORY . . [72
years without change, except that in 1736 it became neces-
sary to extend the provisions of the act to cover imports by
land, as a lucrative trade had sprung up by importing liquors
from the Qolonies. The rates were reduced somewhat in
1745, being fixed at two pence a gallon for spirits, and one
penny a gallon for ale and beer ; but in the following year
the old rate was restored,' in order to provide a fund for re-
building the capitol, which had been destroyed by fire. This
rate of three pence a gallon was continued down to the time
of the Revolution, when it was doubled, and all distillers
were made liable to the payment of it as well as those who
imported the liquors. The duty of one penny a gallon on
beer and ale however was abolished in 1768.'^ The only
other duty on liquors which was at any time levied by the
Assembly was a tax of four pence a gallon upon the product
of the French colonies, which were carrying on a pros-
perous trade by exchanging rum for provisions;'^ this was
in force but eight years, and was imposed for political rather
than fiscal reasons.
There are no direct statements of the productiveness of
this duty ; as we have seen, it yielded about ^600 a year in
the latter half of the seventeenth century; and it is improb-
able that it ever amounted to more than i^i,000 a year prev-
ious to the Revolution.* The principal reason for this was,
that, although a great quantity of liquor was consumed in
the colony, the facilities for smuggling were very great, owing
to the great extent of the sea-coast, and the number of bays
and inlets. The rate was fixed as high as it was deemed
expedient to do so; but the administrative details of the
statutes, and the severity of the penalties for evasion of the
duty, show plainly that it was difftcult to prevent fraud. The
liquor duties were a source of revenue which were incapable
' Hening V, 311 ; vi, 194. 2 jud^^ jx, 350; viii, 335.
^ Ibid., vi, 471; vii, 274. *■ Journal, May 24th, 1763.
73] OF VIRGINIA. ' J 2,
of expansion above a certain maximum. Three pence a
gallon was the highest rate which was practicable. And the
further productiveness of the tax depended solely upon the
amount of the domestic consumption.
The Duty tip07i Slaves Imported. The laborers upon the
plantations in Virginia during the first half of the seventeenth
century were almost exclusively indentured white servants.
In 1649 there were but three hundred negroes in the colony.^
As a consequence there could be little revenue obtained from
a tax upon slaves, for the institution of negro slavery was
not developed until a later time. The only duties that were
imposed at all were nominal fees required from all immi-
grants. In. 1633 a duty of 64 lbs. of tobacco was laid upon
all new comers who planted tobacco within a year of their
arrival.- But it was a part of the customary pojicy of re-
stricting the amount of the tobacco crop rather than as a
fiscal measure. Too great' need was there for laborers and
colonists to allow any extension of this restrictive system,
and it lasted but a year. In fact there was virtually a bounty
rather than a tax upon immigrants then in existence, by rea-
son of a law which allowed a minimum rate of duty upon
tobacco exported, which had been exchanged for slaves
brought to the colony.''
Governor Berkeley afhrmed that a certain duty upon
slaves produced i^6oo a year in 1671, but there is no re-
corded statute of such a nature until 1699. At that time it
became necessary to rebuild the Capitol, destroyed by fire,
and the Assembly took occasion to levy a special tax upon
all new comers. The old system of indentured white labor
was being gradually superseded by negro slavery, owing to
the fostering care of the Royal African Colony.^ That the
^ Supra, page 37. '^ Hening i, 222.
•^ Chas. Campbell, History of Virginia ; Hening i, 535. * Doyle, 385.
I
74 FINANCIAL HISTORY [74
system then in vogue was a mixed one is manifested by the
provisions of the act, which imposed a duty of fifteen shill-
ings upon every white servant not coming out of England,
while a tax of twenty shillings was levied upon every negro
imported.' This proved to be highly successful, as slaves
were being imported in great numbers, so that in 1705 the
duty upon negro slaves was continued." The tax upon in-
dentured white servants apparently fell into disuse with the
decay of the system. Yet in this same year a duty of six
pence a poll was 'laid upon all passengers in merchant ves-
sels. This remained in force until the Revolution, although
it was not stringently enforced, and produced but little
revenue.'^
The slave trade began to assume alarming proportions at
the beginning of the eighteenth century. The governors of
all the- American colonies were instructed to watch over the
interests of the Royal African Company, and the British gov-
ernment entered into several treaties with foreign powers to
insure its proper encouragement,* But now the Burgesses
^ Hening iii, 192. ^ Ibid.^\\\, 229. ^ Ibid.^ iii, 346; Dinwiddie Papers.
* In the last two decades of the 17th century there was a very great demand for
negro slaves in the Spanish colonies of America, and contracts were made by
Spain with the Guinea Company, as well as with many private individuals to supply
the demand by imports, which were known as " el assiento de negres." The
British Royal African Company being very desirous of participating in the benefits
of this traffic, in 1688 addressed a memorial to the king on the subject, and nego-
tiations to that end were instituted. Spain, however, demanded reciprocal rights,
that is to say, permission to import negroes into the English colonies; but tie
Crown lawyers held that such an act would be a violation of the Navigation Acts,
which prohibited all imports of " goods or commodities," except in British ships.
The opinion was held that " negroes are merchandise, and can no more be ex-
ported by the Act than any other goods" (Chalmers, Opinions of Lfnineni Law-
yers, ii, 263). Consequently the proposition failed; but in the reign of Queen
Anne a moi-e determined attitude was taken toward Spain, and the Treaty of
Utrecht authorized a joint contract for the importation of 144,000 negroes in 30
years into the Spanish colonies. — Life of I\. B. Taney, by Samuel Tyler, LL. D.,
Appendix, p. 580, et seq.; Sainshiry MSS., Doyle, 386.
J
75] OF VIRGINIA. 75
suddenly awakened to a sense of the impending danger, as
Massachusetts had done five years before.^ They raised the
duty upon all slaves imported by water from twenty shillings
to £^, applying it to Indians as well as negroes, despite the
Governor's protest. The Royal officials including the Coun-
cil were desirous of continuing the traffic, as they derived a
considerable profit from it. They urged the repeal of the
duty, although they were obliged to confess "it is really true
— that the country is already ruined by the great numbers
of slaves imported of late years." '^
The colonial policy of Great Britain during the next few
decades became more and more unbearable. There is no
blacker crime in the history of England than the persistency
with which she forced the negro slave upon her American
colonies. It was a deliberate prostitution of the national
honor and the acknowledged interests of the colonies, for the
sake of the immediate profit which accrued to the Crown.
The colonial records are filled with instances of brutal at-
tempts to override the remonstrances of the provincial legis-
latures against the extension of this trade. To be sure these
protests were not based on moral grounds ; but they repre-
sented nevertheless the real view of the colonists as to the
effect of slavery upon the material welfare of their social
body. And the earnestness of their opinions is evidenced
by the fact that the Assemblies in urging the restriction of
this traffic, did so at the risk of sacrificing a considerable
revenue.
This prohibitive duty expired by limitation in 171 8, but it
was reimposed in 1724 at a slightly lower rate. By this time
the British government decided to take a firm stand on the
question, and the act was disallowed. Their veto was based
upon a report of the Privy Council, which recited that this
^ Douglas, 87. ^ Spotswood Letters, October 24th, 17 10.
76 FINANCIAL HISTORY Xj^
"duty (;£"5) continued from 1710 to 1718, and tho' no Con-
siderable objections were made at that time, yet it appears
that by the price the negroes then bore, and by the small-
ness of the number that were imported in three years, in
proportion to what have been imported since those acts ex-
pired, and the numbers that are necessarily wanted annually
in ye Colony, This duty must have been a great hindrance
to the Negroe Trade, as well as a Burthen upon the Poore
Planters. And it further appears That this Act lays the
Duty on the Importer, whereby the Trade of Great Britain
will be affected."
The Burgesses renewed the attempt to reimpose the tax
two years later, but with the same result.^ The Governor
reported on March 12th, 1626 : '' You laid a duty on liquors
and slaves imported, as had been done by former Assemblies
with very good effect ; But the Interfering interest of the Af-
rican Company has deprived us of that advantage, and has
obtained a repeal of that law." ^ The other colonies seem to
have offered so much opposition to the repeal of similar
duties that the Crown was finally induced to consider their
rights in the matter. A circular letter of October 14th,. 1729,
was addressed to the Governors of all the colonies in Amer-
ica, instructing them to use their influence, though not their
authority, to procure substitute acts for those imposing im-
port duties upon negroes. The reasons assigned were that
such acts raise the price of labor and put England at a dis-
advantage in competion with her rivals in foreign trade.'^
The Assembly of Virginia refused to yield to this ** influence"
completely, and in 1732 they imposed a new duty of five per
cent., which was probably somewhat lower than the former
rate of ^^5. Another concession was also made by requiring
' Calendar of Virginia State Papers, i, 206.
2 Virginia Historical Register, 1850. ^ Sainsbury MSS., Package ii, 117.
-r^l OF VIRGINIA. yy
henceforth that the duty should be paid by the purchaser
instead of the importer, as had been customary.' This effect-
ually disposed of the primary objections of the African Com-
pany, and no further solicitude on behalf of the "■ Poore
planter" was manifested by the Privy Council.
This rate of five per cent, remained in force until 1740, when
it was doubled, to provide funds for aiding the Crown in the
prosecution of the Spanish war. After four years it was re-
duced once more to the customary rate.^ During the French
and Indian war it was raised to twenty-five per cent., to be
continued at that rate until 1765. But this proved to be too
high, for two reasons.'^ In the first place it did not produce
the maximum revenue, and secondly its prohibitive effect was
not adapted to the later developments of the colony's re-
sources. There had come to be a large demand for slaves,
and many Virginians had become interested in the traffic after
it had been opened to all British subjects by a law of the 23rd
George III. The act which removed the extra duty in 1760
recited that it " hath been found very burthensome to the
fair purchaser, a great disadvantage to the settlement and
improvement of the lands in this colony, introductive of
many frauds, and not to answer the end thereby intended, in-
asmuch as the same prevents the importation of slaves, and
thereby lessens the fund arising from the duties upon slaves."
Henceforth the rate continued at five per cent, until 1766,
when the revenue was found inadequate to balance the bud-
get, and an additional ten per cent, was added for seven years.
Three years later still, another rate of ten per cent, was added,
making a total of twenty-five per cent.* These various duties
were in force until the Revolution, but we may believe that
^ Hening iv, 318. ^ Hening v, 92; vi, 218.
3 Hening vi, 419, 465; vii, 81, 281, 363, 386.
* Hening viii, 190, 237, 337, 344.
78 FINANCIAL HISTORY [78
after 1770, with the growth of the spirit of independence and
the pohtical theories which led to it, the institution of slavery
became more and more unpopular.^ If this view be ac-
cepted, the later impositions of the duty may be regarded as
prohibitions or discouragements of the slave trafhc. These
culminated in 1778, in an act prohibiting all further imports
under penalties of ;^ioo for each offense.' Thus ended all
direct participation of the Commonwealth in the profits of
this nefarious trafftc ; for the Constitution of the United
States soon effectually prevented its revival by forbidding
all importation of slaves after 1809. That this prohibition
was loyally enforced is shown by various acts which were
passed from time to time to secure this result."'
The Export Tax upon Hides. — Besides the import duties
upon slaves and liquors, the export tax upon tobacco, and
the tonnage and port duties, which we have noticed, there
were no regular indirect taxes levied in Virginia. There
were a few other sporadic attempts to tax foreign trade ; but
they were either for prohibitive purposes, as in 1660, when
five shillings a barrel was imposed upon all meats exported ;*
or they were part of a protective poHcy for the encouragement
of certain industries. The prohibition of all exports of hides
was customary from the earliest days of the colony,^ in order
that the country should be supplied with leather at reason-
able prices. But in 1 691, the college became the object of
much solicitude, and various acts were passed to provide a
revenue for it. It was conceived that these two objects
might be combined, thereby encouraging learning, and at
the same time restricting the export of hides and skins. An
' South Carolina forbade all further importations of slaves in 1760, as the num-
ber were becoming too great; but the Governor was reprimanded for assenting to
it, and the act was disallowed.
2 Hening ix, 471. ^ Statutes, 1809, 61,6.
*Hening ii, 21. ^ Hening i, 174, 488; ii, 179, 185, 216.
prQ-| OF VIRGINIA. 79
export duty was therefore laid at the rate of one shilHng per
raw hide, two shilHngs for each tanned hide, buckskins eight
pence, doeskins five pence, each pound of wool six pence,
and of iron one penny. The proceeds of these duties were
then to be devoted to the uses of William and Mary Col-
lege.^
This duty was found to be too high, and was reduced to
three pence per raw hide, and six pence per side of leather,
while fox, mink, raccoon, and other skins were taxed from
three farthings to a penny each." These rates were con-
tinued from time to time ; and they were often increased for
special purposes, as in 1755 for rebuilding warehouses de-
stroyed by fire;'' but were of little importance. In 1744
they were greatly increased, (to 2 sh. 6 d. and 5 sh. for raw
and tanned hides respectively) being thought to be *' dispro-
portionate to the real value of hides. The Burgesses soon
discovered, however, that this was a virtual prohibition ; and
the old rates were reinstated. It was found that " 6 d. on a
raw hide, increases the college revenue, (and) is easily born
by the commodity." The principal export consisted of the
raw hides, so that now the rates were made equal upon both
raw and tanned hides, and shortly afterward all other skins
were taxed at a uniform rate of two pence a dozen.* It will
be remembered that the Assembly had also imposed an extra
duty of one penny a pound on tobacco exported during most
of the eighteenth century. Yet the revenue from both these
sources together was not very considerable ; and was devoted
exclusively to the support of the college. Its importance in
this connection lies in the fact that these duties upon hides
were the only customs duties which were imposed at any time,
except those which we have mentioned previously. There
^ Hening iii, 63. '^ Ibid., 123.
^ Hening vi, 487; v, 37. * Hening v, 437; vi, 91.
8o FINANCIAL HISTORY |^80
was no power to tax imports ; it was contrary to the
colonial policy of Great Britain ; and we have seen that when-
ever the Assembly tried, as in 171 1, to impose a general im-
port duty, it was disallowed by the Governor. There was no
resource for indirect taxes except the duties upon exports,
and Virginia exported nothing but tobacco to any consider-
able amount.
Tonnage Duties. An act of 163 1 ordered that " every ves-
sell or shipp comminge out of the ocean (which) shall — un-
til further order be taken in, shall pay after the rate — of gun
powder and ten iron shott for every hundred tunns, and so
to be accounted proportionably bigger or lesser.'" This law
was imposed in order to provide ammunition for the fort at
Point Comfort. Soon after this, the rate of contribution was
fixed at one hundred pounds of powder and ten shot for
every hundred tons. Then it was changed again to a quarter
pound of powder for each ton, as the vessels were all less
than a hundred tons burden. In 1639, this fee was estab-
lished at a proportionable amount of '' match and paper
Roial," but three years later the old proportion of powder
and shot was enacted in addition. It was soon increased to
a half pound of powder and three pounds of shot, or in
money three pence a ton instead."*
This became the customary rate, and it was continued
from time to time. Still it was merely incidental to the
other customs regulations, and was rather an inspection and
entry fee than a tax. Vessels were obliged to pay it at each
voyage, whether they were laden or not. But as late as
1 67 1, it is reported that only eighty ships a year traded
with Virginia, so that the revenue could not have been of
any value. It was generally included under the head of im-
port duties."' A slight addition was made to this fee during
1 Hening i, 176. '^ Hening i, 218, 247; ii, 446.
'^ Blair and Chilton; Spotswood Letters, May 17th, 1717; Dinwiddie Letters,
October 25th, 1754.
8i] OF VIRGLYIA. 3 1
the administration of Governor Culpepper. He secured a
grant from the Assembly of the right to demand a port duty
from incoming vessels, in return for his indemnity to the
participants in Bacon's Rebellion/ This was merely a con-
tinuation of an old custom in accordance with which masters
of ships had made presents of wine, fruits and provisions to
the chief executive. It soon died out, however, and al-
though Sir William Keith declared that the port duty pro-
duced ;^500 in 1738,- no further mention of it occurs in the
colonial records. It probably fell into disuse with the grow-
ing opposition to the exactions of the Royal officials. Not
unlike the right of prisage in Great Britain it did not sur-
vive the semi-feudal relations which gave it birth.
^ Burk ii, 225. ^ Burk ii. Appendix, xxii.
CHAPTER IV.
LOCAL TAXES.
The Powers, Functions and Fiscal Importance of Local
Bodies. New England is the classical home of local self-
government in America, while in the southern colonies no
towns existed at all until the close of the colonial period.
The directions in which administrative power and control
were exerted were diametrically opposite. In Massachu-
setts the colony was but an aggregation of largely independ-
ent local units ; in the South the whole colony was the unit,
of which the local bodies were subsidiary parts. Here there
was no nucleus about which local governmental powers
could be collected, and everything conspired to restrict the
growth of any local autonomy. Each plantation, like the
ancient household, was isolated, independent and completely
self-sufficient. The General Assembly was the sole repre-
sentative of sovereignty, and such local bodies as existed
were mere agents to execute its will. The only local insti-
tutions were the county courts and the parish vestries, and
they were but creatures of the central government. This
body granted or removed powers with no limitation in theory
or practice. It was an extreme example of the American
system of specific delegation and limitation of the powers
of local units, and was marked by constant interference of
the central government in the affairs of local communities.
This relation existing between the general and the local
governments is reflected in the fiscal history of the Com-
monwealth. The local units were almost as old as the
(82)
83] OF VIRGINIA. '^T^
colony, but their functions were so limited that the local
taxes, with the exception of the church tithes, weie unimport-
ant. As early as 1623 provision was made for a fund for
local expenses, as we have seen, by requiring a yearly de-
posit of commodities in a parish granary, to be disposed by
the majority of the freemen/ It was a fair beginning but
the development which ensued was very slow. The county
courts entailed but little expense, since the justices were for-
bidden to levy taxes for their support during the sitting of
that body,'*^ and their service at other times was gratuitous.
For many years there were no county buildings, the court
sitting in the open air, beneath a spreading tree by the four
corners, if perchance good fortune had bestowed any roads
upon the neighborhood. As a rule few of these existed, the
waterways being numerous and more convenient. A few
bridges were needed, but ferries were generally preferred in
the tide-water region. Even these were no charge upon the
tax payers, for the privilege of carrying passengers for a fee
fixed by the legislature was gladly assumed by private indi-
viduals. There was no public education, the only institution
of learning, William and Mary college, being supported by
indirect taxes laid by the .Assembly. About the only ex-
penses were those incurred for the erection of tobacco ware-
houses, the maintenance of a few bridges, and the care of
the poor. And the Assembly often assumed the cost of the
first of these,'^ while the care of the poor was delegated to
the parish vestry.
For many years however, there was a peculiar charge im-
posed upon the localities, for the payment of bounties author-
ized by the assembly for the '' encouragement of manufac-
tures." The inauguration of this policy occurred in 1661,
with the vigorous administration succeeding the Restoration ;
' Hening i, 128. '^ Hening ii, 315.
'^Journal, May 31st, 1740; Hening, iv, 208; vi, 477.
84 • FTNAXCIAL HISTORY [84
it provided for bounties on wool and flax, to be paid by the
Assembly from the general levy.^ Before long this charge
was shifted upon the county courts entirely, each being
liable for the bounties in its own district. The advent of
Governor Nicholson brought a repeal of these provisions in
1684, on account of the "charge and inconvenience.'- But
they were revived seven years later, and remained in force
for some time. They must have been considerable at times,
for the bounties were as .high as 800, 600, and 400 lbs. of
flax respectively for the three grades of linen made ; and
some counties produced as much as 40,000 yards of cloth in a
year.'' Moreover they were particularly onerous, as the peo
pie seldom turned to this industry, except when there was a
depression in the tobacco trade. At such times the commu-
nity was always distressed ; but fortunately, tobacco was usu-
ally cheap and plentiful, when there was no foreign demand
for it, so these levies were generally collectible. During the
first half of the eighteenth century the colonial policy of Great
Britain effectually prevented any extension of this system. It
was revived in 1759/ but the government had become so cen-
tralized that all of the expenses were borne by the Assem-
bly. A similar charge upon the. county courts was the pay-
ment of bounties for wolves, crows and the Hke, but they
were so small as to be of no fiscal importance.^ The only
local expenditure which v/as large enough to occasion com-
plaint was that occasioned by the erection of county build-
ings. The notice of such an event usually caused so general
an exodus of slaves and tithables into the adjoining counties
that special legislation was required to prevent it."
The local expenditures were invariably met by means of
^ Hening i. 469. '^ Ibid., ii, 120, 236, 287, 493, 503; iii, 16.
^ Spolswood letters, March 20th, 1710. * Hening vii, 288.
^ Ibid., ii, 236; V, 80. ^ Ibid., v, 35.
3^1 OF VIRGINIA. 85
a poll tax levied upon the male inhabitants of the county.
They were usually rated by the justices of the county courts,
although this seems to have been productive of abuses, es-
pecially in the payment of bounties. In 1676, for instance,
it is asserted that the local levy amounted to forty pounds of
tobacco per poll,' while the average of the eighteenth cen-
tury was only about four pounds." The Reform Assembly
which met in June of that year dealt with this matter by or-
dering that henceforth a number of the '* discreetest and
ablest" freeholders of the county equal to the number of
justices, should join with them in assessing the levy, since
" it hath been suspected that sums have been raised in
divers counties for the interest of particular persons, to the
prejudice of the said counties."' This was too cumbersome,
and the power to levy taxes was conferred once more upon
the justices alone, or upon the court-martial if the district
were unorganized.* As these bodies had been previously
prohibited from levying any taxes for their own " accommo-
dation," and as the bounty system was abolished after a time,
the old abuses did not recur.
The assessment of these taxes was made upon the basis of
the lists of tithables made out by the Assembly. In the col-
lection of the general levy, any surplus above the allotted
quota went to the county, while the local taxes were held by
the sheriff for the use of the Assembly if there had been an
over-estimate in the allotment of that county. Thus it ap-
pears that while the sherifif was held liable for the amount of
the general and local levies in his district, so also the
county, as a fiscal entity, was responsible for the payment of
its apportioned quota of the general levy, even at the ex-
pense of its local taxes.'' In all respects this general levy
1 " Virginians Defioured Condition " reprinted in the Massachusetts Historical
Society Collections.
'•^ Hening iv, 370. ^ Ibid., ii, 357. ^ Ibid., v, 175, 188. ^ Ibid., iv, 370.
86 FINANCIAL HISTORY [86
assessed by the Assembly, took precedence over the reve-
nues needed for local expenses. In 1742, the county courts,
were empowered to contract debts for permanent improve-
ments but they were held to a strict accountability/ A con-
stant tendency was manifested by the legislature to encroach
upon the sphere of local self-government. Many functions, at
first purely local, were absorbed by it, and with this ten-
dency the fiscal powers of localities were curtailed. The
control of the inspection of tobacco, the cost of erecting
warehouses, the regulation of the rents and salaries which
should be paid, as well as all damages incurred by flood or
fire, were assumed by the legislature. The wages of the
Burgesses, at first paid by the county courts, were trans-
ferred to the Assembly. And this movement went on until
by the close of the eighteenth century the rural communi-
ties were stripped of most of their functions, except the
building of bridges.'
The rise of towns and municipalities did not occur until
after 1750, and the legislature at once manifested a jealous
disposition to limit their activities. Such few powers as
were granted were for specific purposes and a limited time.
The city of Williamsburg, in 1744, needing a prison, was
permitted to impose a poll tax ** for the time being;" but
not till 1 762 did it receive authority to levy taxes to keep its
streets in repair.'' Two years later this plenitude of powers
was deemed liable to *' prove of dangerous consequence to
the liberties and properties of the said citizens."* Conse-
quently, all of its fiscal powers were reenumerated and
specifically limited. Even the power to contract loans,
which the counties enjoyed, was expressly withheld. The
result was that as late as 1799 the town taxes were only
' Hening v, 175. ' I.a Rochefoucauld's Travels,
^ Henmg v, 263. ^ Ibid., vii, 469.
I
yl OF VIRGINIA. g^
about fifty cents per poll, and the only expenditures were for
the care of the poor/ Until 1763 Norfolk Borough was not
empowered to assess taxes for a night watch, a ferry, or
street lamps; and in 1772 it was obliged to petition for au-
thority to raise money for building a powder magazine."^
The first instance of a grant of any considerable power of
taxation occurs in J 782, when the city of Richmiond was in-
corporated ;^ and yet, nearly twenty years later, the municipal
charges and the revenue were very small. The poor rate
was the main tax, being levied upon carriages, the renting of
houses and free negroes/ But this belongs to the history of
a later time. Vve may conclude that during the colonial
period the fiscal importance of local bodies was very slight.
The few powers exercised by the early towns in the days of
the Virginia Company were dissipated with the development
of the counties which supplanted them as local units. And
these rural comrQunities were too scattered and indefinite to
exercise any considerable functions of government. Towns
were growing, to be sure, but their activities were not devel-
oped until a later date.
The Church Tithes. A local tax of a peculiar character
was found in Virginia in addition to the county levy. This
was known as the minister's tithe, and was imposed to pro-
vide for the support of the established church. At first there
had been no distinction between the parish and the county;'^
but by degrees the parish became differentiated from the
larger body, and the tithes developed into a special and
peculiar charge upon all who lived within its limits. It was
a local tax from which there were no exemptions; and was
so universal in its application that it was regulated by the
^ La Rochefoucauld's Travels. ^ Hening vii, 152, 611, 652. "^ Ibid., xi, 47.
* La Rochefoucauld's Travels.
5 Virginia Local Institutions, Johns Hopkins University Series, ii.
88 FINANCIAL HISTORY I 88
assembly, and not by the parish vestry/ All other local rates
were fixed by the county courts, but in this case the vestries
merely collected the tithe assessed by the assembly for the
minister. They were, however, permitted to levy an addi-
tional amount for the other parish expenses. Thus the tithe
was essentially a local tax, since the proceeds of it were al-
ways expended in the particular district in which they were
collected.
The earliest expedient for providing for the support of the
clergy was similar to that adopted by the Virginia Company
for the compensation of its regular officials. One hundred
acres were set apart in each parish as a glebe, and six tenants
were settled upon it who should provide for its proper cul-
tivation. On the downfall of the Company the tithe was
substituted for the tenants, although the glebe lands were
still set apart as a private domain.^ No planter was permit-
ted to sell his tobacco until his tithes had been paid, for the
collection of which one man was chosen in each hundred.
In 1629 a curious act was passed to continue this tax, enact-
ing " that all those that worke in the ground of what quali-
tie or condition soever shall pay tithes to the minister" ^
And these contributions were to be taken from the " first
and best" tobacco and corn in every case. Being intended
to quicken the moral sense of the community, they were often
combined so as to act as sumptuary laws.* One of the first
of these enacted " against excesse in apparell, that every
man be cessed in the churche for all publique contribu-
tions ; if be he unmarried, according to his owne apparell ; if
he be married according to his owne and his wives or cither
of their apparell."*
^Neill, Virginia Carolortim, 168.
^Virginia Historical Collections^ i, ii, 45; Stith, 319.
'Hening i, 124, 144, 242. ^ Journal ^ August 2nd, 1619.
39 J OF VIRGTNIA. 89
At first the yearly allowance for each minister was regu-
lated according to the price of tobacco for each particular
year, so that its real value might be kept as nearly constant
as possible. In 1631 the tithe, therefore, was equal to the
average value of a bushel of corn and ten pounds of tobacco,
together with the twentieth calf, kid or pig. Fifty years
later this was commuted into sixteen pounds of tobacco in
lieu of other provisions. The average allowance for each
minister was supposed to be equal to ^80 a year, although
in good times it was sometimes as much as i^ioo.^ The
fluctuations in the price of tobacco could never be predicted,
and a movement was set on foot toward the close of the
17th century to define these salaries more exactly. In 1696,
they were fixed at 16,000 pounds of tobacco (net), beside
the use of a glebe of 200 acres and a " mansion house."
Five per cent, was allowed for collection, but this proved to
be so inadequate that it was increased to ten per cent, in
1727. Moreover, the tobacco w^as to be delivered at a con-
venient landing on some navigable stream.^
The ancient custom of varying the amount of the tobacco
according to its price was thus abolished. By the new sys-
tem the minister was supposed to be compensated for his
losses in bad years by the surplus which accrued to him in
prosperous seasons. This was oftentimes no small hardship
to the clergy, and their salaries are said to have been reduced
during peculiarly hard years as low as £2^ in money. Gov-
ernor Spotswood tried to reform the system by levying forty
pounds of tobacco on each tithable, and converting the
proceeds into cash, from which ;^8o in money should be paid
to each minister, but the project was condemned by the Bur-
gesses.^ And this allowance of 16,000 lbs. of tobacco re-
^Hening i, 159, 220, 226; Foote's Sketches; Perry's Historical Collections;
Force's Tracts, \\. • '^ Ibid.; Hening iv, 205.
'^ Spotswood Letters, l>io\c:WLhQX nth, 171 1.
^
go FINANCIAL HISTORY [90
mained constant during th^e colonial period, until a change
in public sentiment toward the English Church led to its dis-
establishment during the Revolutionary period.
The first manifestation of this opposition, which was due
to the character of the population which settled the Western
District, and later to the strained relations with the mother
country, occurred in 1755. The crop of tobacco for that
year was especially poor, and the price was proportionally
enhanced. This made the tithes especially obnoxious, and
the Burgesses bethought themselves of easing the burden a
bit by permitting a payment of it in money at two pence a
pound. Since the price of tobacco was considerably above
this figure, the result of this act was to curtail the salaries of
all the clergy. It was, however, wisely limited to ten months,
a period too short to enable the Crown to disallow it, and yet
long enough to bridge over the season of scarcity. So far as
the clergy were concerned, this law was undoubtedly unjust
and dishonest, and as such has been severely condemned by
all historians. And yet in all other respects it was a salutary
provision againSt the extortions which were often practised
by avaricious sheriffs upon those who for any reason could
not obtain tobacco with which to pay their debts, and who
were obliged to commute them into money.
The clergy submitted to this obvious injustice ; but when
the Burgesses tried to reenact it three years later, they pro-
ceeded to contest it in the courts.^ The regular allowance
for the year would have been ^^400, which was reduced to
^133 by the operation of this second law. The case has
been immortaHzed as the " Parson's Cause" in the history of
the struggle for American Independence. But we shall in
this place merely refer to it, leaving its dramatic features to
the writers on political history. Suffice it to say that the
^Life of FaOick IJenry, by W. W. Henry, as well as M. C. Tyler.
9 1 J OF VIRGINIA. 91
act was disallowed by the Crown, although the courts all re-
fused to award any damages, probably* because of the grow-
ing antagonism toward Great Britain. The tithes were tem-
porarily suspended from year to year after 1776, although yK
the vestries were all permitted to levy a poor rate/ In 1779
the whole system was abolished. With the formal disestab-
lishment of the church, the glebe lands were confiscated, and
the complete separation pf church and state was accom-
plished. Henceforth the local taxes were purely political or
administrative in character, and the ecclesiastical parish dis-
appeared as a governmental agent.
^Hening ix, 312, 579; x, 197.
CHAPTER V.
THE BUDGET.
The budget is an institution wtfich is peculiar to a devel-
oped state where definite governmental policies are devised,
maintained or modified to suit the ends for which the state
exists. It implies the establishment of a stable government,
with an organic administrative machinery, a certain regular-
ity in pubHc expenditures, and the authority to enforce con-
tributions to meet such demands. In the days of martial
law, or of purely speculative venture, which prevailed for
some time in Virginia, there was no such regularity in either
revenues or expenditure. And even when the public body
began to take form, it is impossible to distinguish the pri-
vate from the public functions of the nascent state. No
budget existed, therefore, for many years. When it finally
developed it was formed through a combination of the
various parts, each of which we have already studied in de-
tail. We have seen what was the nature of the revenue, and
the expenses of the government; what external factors de-
termined or limited their practical application ; and in how
far the popular representatives utilized the possibilities of
them. The next step is to gather these various parts to-
gether, and to discover what influence they exerted upon
each other. First, however, it will be necessary to consider
the political or constitutional questions which arose in regard
to the relations of the Crown to the Colony in fiscal affairs ;
and then the results of the preceding studies will be
grouped under a single head, that we may see what finally
determined the fiscal policy of the Commonwealth.
92 [92
Q^l OF VIRGINIA. 93
The C 071 stitutional Separation of Powers. Various provis-
ions in the early charter of the Virginia Company granted to
the colonists exemption from all taxation, with the exception
of certain duties upon imports ; but these were all abrogated
with the withdrawal of its charter in 1625. At this time all
of the powers granted to this corporation reverted to the
Crown, and of course this immunity from taxation was
removed at the same time. Had James the First lived until
Virginia became more than a mere speck upon the map of
America, it is impossible to say what might have been the
result. It chanced, however, that other affairs occupied the
minds of Englishmen, until the colony had quietly grown to
such a size that it was able to assert its rights. Charles I
was a broader-minded sovereign in many respects than his
father, and he seems to have recognized the position which
the Assembly assumed as the basis for its future constitution.
The Assembly met regularly with the sanction of the
King, during the period from 1625 to 1639, at which latter
date its legal powers were defined for the first time. Then
it was that the Burgesses asserted the exclusive right of leg-
islation in all matters of taxation.^ Governor Harvey had
arbitrarily increased his perquisites of office. by the imposi-
tion of heavy fines and amercements, and had claimed abso-
lute supremacy in all legislative affairs. It became highly
important, therefore, for the Assembly to curb the executive
authority by a distinct assertion of rights. To be sure much
of this tyranny on the Governor's part was probably due to
the failure to make due provision for his support after the
dissolution of the Company. But in 1639 the Burgesses
remedied this evil, receiving the assent of the executive to
their novel assumption of power in return for this grant of
revenue. The King was too deeply involved in his own
affairs to take note of this, even if he had deemed it of sufifi-
^ Hening i, 171.
94 FINANCIAL HISTORY [94
cient importance to do so. In this manner the Burgesses
established a precedent, which served as a basis, for their
claims, until Governor Berkeley's charter granted them the
right of government " according to the laws of England."
Thus the right of absolute control in all matters of taxation
was firmly fixed in the colonial legislature. The future dis-
putes and struggles with the executive were mainly attempts
to re-assert powers which had inadvertently fallen into disuse
through careless or indefinite legislation.
For many years all public contributions were made in
kind ; they were paid directly to the person for whose use
they were intended and each want was satisfied as it arose.
Generally there was no treasury balance of any kind ; in fact
there was no place in which it could have been deposited —
no officer who was empowered to care for it. In a few in-
stances, when disbursements were delayed unexpectedly, the
collected tobacco was left in the care of the Commissioners
of the County Courts ; ' but usually no provision for the
future was made. This was in part a result of the simple
system of the time. It was also due to another principle
firmly fixed in the policy of the Assembly, which w^as that
no independent or permanent source of supplies should ever
be allowed to the executive. The Burgesses had gained
control of the purse ; .but the power of appointment was still
vested in the Crown. And their precious privilege was of
no avail unless with it was coupled a certain coercive power
over the representative of the King.
( When Governor Berkeley first came to the colony, bring-
ing the welcorne charter of 1639, the burgesses, as a mark of
gratitude, granted him a yearly poll tax of four pounds of
tobacco'^ during his term of office. This was a dangerous
precedent, as they soon realized, and when the overthrow of
the Stuarts ended the Governor's authority, they hastened to
1 Hening i, 286, =• Burk ii, 65.
gr-l OF VIRGINIA. C)^
make a nev/ contract with him. The supplies which were
granted therefore in 1642 were distinctly stated to be merely
temporary in their character — not to be i^epeated, except in
case of necessity.^ Of course the Governor had nothing else
to do but accept these terms ; and the assembly once more
made good its claim to supremacy in fiscal affairs. An ap-
parent exception to this established policy was a grant of
power to the Governor and Council, in 1 661, to raise a levy
for county expenses for three years, not to exceed twenty
pounds of tobacco. This liberality was tempered, however,
by a saving clause which reserved power to change it if an
Assembly should be convened before the expiration of .that
time.
The general reaction in favor of the royal prerogative
after the Restoration did not affect the supremacy of the As-
sembly in matters of finance. The Governor now attempted
to strengthen his power by means of an alliance with the
Council, which in 1631 had been active in its resistance to his
authority.- Since that time this advisory body had become
closely allied with him in material as well as political interests.
The Councillors for instance were first exempted from taxa-
tion by the charter of 1639, which Governor Berkeley had
brought with him ; the patronage of the colony had become
very extensive, being largely at the disposition of the Gov-
^ "This Grand Assembly, haveing alsoe entered into a deep sense and consid-
eration of the duty and trust which the publique votes and suffrages have cast
upon them, under which is comprehended as the most speciall and binding obli-
gation, the preservation of the rights and properties of the people, to which this
course may seem to threaten violence ; yet as well for the silenceing of pretences
as for answering of arguments of weight, it is thought fit hereby to declare that as
from the infancy of the collony, there was never the like concurrence and pres-
sure of affairs, so they have recorded to their posteritie with this ensueing presi-
dent of accommodation for the Governor, that the aforesaid instance and motives
removed, they will never yield or consent to receive (renew) the same. — Henin^
i, 280.
'^ Burk ii, 28; Blair and Chilton.
96 FIN Ah' CI AL HISTORY [q6
ernor; and this power was used to create a compact body
of devoted adherents who upheld the executive against the
legislature. The council was not affected by tax laws, and
had no motive for opposing any schemes for increasing the
Governor's prerogative. Yet too much importance must not
be ascribed to the influence of this body; nor to the mere
fact that its members were not liable to taxation.' For the
financial system then in vogue made a mere personal ex-
emption from levies of little value so long as the poll tax
was still imposed upon the slaves and family servants. Nev-
ertheless the position of these officials was a highly favored
one in many ways, since they held nearly all of the offices of
honor or profit in the colony. They were of no slight im-
portance therefore as allies of the Governor in settling the
final balance of power.
After his reappointment in 1661, Governor Berkeley be-
thought himself of making use of this body, which had now
become fully dependent upon his favor. The Assembly had
allowed the Council to hold an advisory power in the con-
sideration in committee of matters of fiscal importance.
And the Governor preferred the modest yet insidious request
in 1667, that the Burgesses should allow two of these Coun-
cillors to join with them in granting or confirming the public
levies," — which was indeed to induce a crafty confusion of
the customary functions of the legislature and the executive.
This was instantly perceived 'by the Assembly, which hum-
bly answered, '' That they conceive it their privilege to lay
the levy in the house ; and they will admit nothing in refer-
ence from the honorable governor and council, unless it be
before adjudged and confirmed by act or order, and after
^ This immunity from taxation was regarded even by the Reform Assembly of
1676, as a compensation for their services. It does not seem to have been strenu-
ously opposed by the Burgesses. — Ilening ii, 359.
P7] OF VIRGINIA, gj
passing in the house, shall be presented to their honors for
their approbation or consent." But one course was open to
the Governor, so he returned answer that " This is willingly
assented to and desired to remain on record for a rule to
walk by for the future which will be satisfactory to all."
Thus did Governor Berkeley learn his lesson in the science
of finance.
The next incident in the history of the balance of power,
occurred when Governor Culpepper returned to Virginia in
1679, bringing complete indemnity for all the offences com-
mitted during the late rebellion. The Burgesses were so
overcome by this generosity that when they granted the
usual duties for the Governor's support, they made them
perpetual, and subject to none save His Majesty's sole direc-
tion and control.^ They moreover changed the customary
presents of wine and dainties made by the masters of incom-
ing ships to the Governor into a regular due, which was rig-
orously exacted for some time. This seemed so auspicious
that Lord Culpepper's successor tried to force matters a lit-
tle further. He was instructed by the .Board of Trade and
Plantations, in 1680,^ to obtain a revival of that former grant
of power to levy a small tax independently of the Assembly,
which Governor Berkeley had previously enjoyed. This the
Governor attempted to do in 1683, in vain; for the Assem-
bly proved to be " peevishly refractory to the least proposi-
tion,'" answering that they could " in no waies concede to
it." Disappointed in this direction, he endeavored to in-
crease the perquisites of his of^ce by imposing a tax of twenty
shillings a year upon schoolmasters, £^ upon lawyers in the
general court, and fifty shillings on those practising in the
county courts, together with a tax of two hundred pounds of
tobacco upon the probate of wills.* These last were, however,
^ Burk ii, 22. - McDonald AISS., December 3d, 1680. ^ Ibid., vii, 223.
* Beverley; and Burk ii, 301, 308.
98 FINANCIAL HISTORY [98
promptly removed during the next year through the earnest
representations of Col. Thomas Ludwell, the agent of the
Assembly in England.
The Revolution of 1688 exerted little influence upon the
relations of the various parties in Virginia. The policy of
the Governors seems to have been to prevent agitation
by promptly proroguing the Assemblies whenever they
showed a disposition to be refractory. As for their own per-
sonal support, we may believe that the unlucky step of grant-
them a regular duty upon tobacco exported removed the par-
tial dependence which had formerly existed. The exclusive
right of the Assembly to lay taxes was not contested, but so
long as no extraordinary supplies were needed the Gover-
nors could afford to wait.^ The effect of this policy was that
no supplies were granted, and a gradual accumulation of in-
debtedness ensued. In 171 2 Governor Spotswood reported
that the revenue had been defective for twenty-two years,
and that ;!{^7000 had been taken from the king's private
estate.'^ All this naturally favored the popular party, which
held the grip upon the purse-strings. At last the Governor
was obliged to abandon the customary policy of coercion,
and conciliation was adopted instead. The Assembly was
** such a Whimsical Multitude, that it requires a great deal
of Management to gain their consent to anything that's new,
especially where money is required."'
This attitude was a sore trial to Governor Spotswood, for
he was a progressive man. He wanted to reform the system
of tithes, to reorganize the quit-rents, and to increase the
revenue from the export duties. But the Burgesses not only
asserted their authority ; they became aggressive at last, and
demanded that these quit-rents should no longer be drawn
' In 1695 Governor Andros tried to obtain a grant of ;^500 to aid New York
but was refused. — Sainsbury AISS., iv, 231.
"^ Letter Sy Introduction. ^ Ibid.y November nth, 1711.
ggj OF VIRGINIA. 99
away to England but should be devoted to reducing the
burden of taxation. As we have seen, this right was denied
by the Crown, but the matter was compromised by dona-
tions from time to time at the request of the Assembly.
Years of plenty and prosperity succeeded and the treasury
was abundantly supplied by the customary methods, so that
all discussions upon the subject of authority were silenced for
a time. Yet prosperity did not tempt the Assembly into a
repetition of its former indiscretions in dealing with the exe-
cutive. Sir William Keith truly described their policy a half
century later when he afiirmed that " the public there is gen-
erally in debt, because they are extremely jealous of at-
tempts upon their liberties, and apprehensive that if at any
time the public treasury was rich, it might prove too great a
temptation for an artful governor."^
The Burgesses by carefully adhering to this policy ap-
parently regained all of their rights which had been curtailed
during the closing decades of the seventeenth century. The
Governors tried to cajole, to higgle or to threaten whenever
extra supplies were needed, but the legislatures could not be
moved. At last they became so exceedingly independent
that they compelled a strong executive like Governor Din-
widdle to assent to an act '* clogg'd with unreasonable regu-
lat's and Encroachm'ts on the Prerogative." '^ The necessity
of extraordinary taxes for the prosecution of the war with
the French still further emboldened the popular representa-
tives, until the Governor in despair wrote to the Council in
England that " there appears to me an Infatuation in all the
Assemblies in this part of the world."
One final struggle was made by Governor Dinwiddle to
secure an independent revenue of his own. He attempted
I
"^A short discourse on the present state of the colonies in America with respect to
Great Britain.
'^ Letters, Novemher I2th, 1754.
1 00 FINANCIAL HIST OR Y [^ I Oo
to revive the fee of a pistole for the use of the Royal seal
which was necessary to the validity of every land patent. A
similar exaction had been made by Lord Howard in 1685 5
but it was declared " uneasy and burdensome" to the people,
and was finally discontinued by the King's orders.^ At this
attempt of the Governor's, the Assembly at once became " so
violently warm thereon" that he was obliged to prorogue
them. The Burgesses petitioned the King, and the matter
was discussed for over a year. Finally the Council decided
to reject their address ; even Horace Walpole seems to have
upheld the Governor's conduct in the matter. It was deemed
best, however, not to be too exacting, and the fee was dis-
continued, although the right to impose it was still claimed."
From this time the active opposition to the representatives
of the Crown became more and more pronounced. And the
Governor dared not be too aggressive, apparently having a
premonition of the result. The people opposing the embargo
in 1757, Governor Dinwiddle wrote to the Lords of Trade
that he " thought it more eligible to take [it] off than to
admit of any Dispute of Y'r Power in ordering it." Despite
this warning, the fatal policy of adopting more stringent
measures was pursued. Lord Dunmore was even forbidden
to assent to any revenue bills which were not permanent,
unless they were intended to defray temporary expenses.''
This arbitrary conduct was met by an equal determination
on the part of the people not to yield. The crisis was thus
hastened by the conduct of both parties, until the final sepa-
ration ensued in 1776 when the Burgesses became the sole
representatives of sovereignty in the colony.
Development and Analysis of the Budget. It has appeared
^Letters of Governor Dinwiddie, November 28th, 1753; March 24th, April
26th, May loth, July 24th, and October 25th, 1754; yotir7ial,'^Qvexnbtt 28th, 1753.
'^ Winnoioings in American History^ Virginia I'racts^ § i, by W. C. Ford.
^ Massachtiseits Historical Society CollecitotiSy x, 635.
lOl] OF VIRGINIA, lOi
rom the previous study of Virginian institutions that the
earhest expenses of the incipient state were those required
for the support of the various officials who were appointed
by the Company or the King. Yet after the reversion of the
domains which had at first been set apart for this purpose,
no particular provision was made for these salaries, which
were apparently paid from the Royal Exchequer. For many
years therefore the principal expenditures which were de-
manded directly of the Assembly were for the defence of the
colony from the Indians. In 1629, nearly the whole appro-
priation of 8,000 lbs. of tobacco was made for the purchase
of ordnance, powder, shot and military supplies. Three
years later, 20,000 pounds was expended for the same pur-
pose ; while the supplementary charges of pensions and
damages were very considerable. Forts had to be con-
structed and a ijiilitia maintained at the public expense.^
With the growing extent of the colony these items nat-
urally became secondary in the regular peace budget, and
the salaries' account once more became prominent. Whereas
the sole charge in 1639 had been ;^ 1,000 for the Governor's
support, with the expansion of the sphere, of government
this increased until the fixed salaries alone absorbed ;^3,ooo
in 1700. By the middle of the next century it became nec-
essary to raise over ;^4,ooo yearly for these items alone.
The salary of the chief executive had been doubled during
Governor Culpepper's term ; and the Council which at first
had served without compensation was allowed i^350, together
with a salary of ;^500 for the Lord President. The per-
quisites of this body moreover amounted to upwards of ;^400.^
As for the expenses of administering justfce, those services
^Heningi, 128, 143, 196.
"^ Ibid., i, 423; Burk ii, Appendix, iv; Oldmixon; Dinwiddle Letters, OcXo-
ber 25th, 1754.
102 FINANCIAL HISTORY [102
which were not gratuitous were performed by the regular
officials for the payment of a certain fee in tobacco.'
In order to meet all of these increased expenses, the
revenues of the colony had to be constantly augmented. At
first a simple levy by the poll had sufficed. Then it became
necessary to provide for a permanent revenue to meet the
fixed charges, for which purpose the export tax upon tobacco
was instituted. This, however, was not available for the
other general expenses of government. The assembly had
no control over it, since all accounts were made to the King's
agent alone. At one time the proceeds of it were not even
deposited in Virginia, but were transported to England, the
payment of the salaries being strictly limited to the Crown
officials.'' The fund was therefore as completely removed
from the control of the Assembly as if it had never existed,
and the poll tax was still their sole suppcirt. And this was
not a permanent source of income ; it was generally appro-
priated by the same act which authorized its levy ; and no
surplus remained for contingent expenses. To meet this
need of a definite permanent income, the liquor duties were
imposed in 1682 and the tax upon imported slaves was soon
added. These taxes were to constitute a fund which should
be exclusively subject to the control of the Assembly. Un-
fortunately, however, they proved to be exceedingly inelastic,
and too dependent upon the general social and political con-
ditions of the colony. Yet in ordinary times they served
well enough, and once or twice even yielded a surplus.
With their establishment it became necessary to have an
officer to care for the moneys which they produced, so that
in 1695 ^ Treasurer was appointed who was made account-
able to the Burgesses alone. He was independent 'of the
^Hening i, 176, 201, 266, 463; ii, 244.
'^ McDonald MSS., October loth, 1676; viii, 238; Sainsbury AfSS., viii, 22.
I03] OF VIRGINIA. 103
Auditor and the Receiver General, who were mere agents of
the Crown in the colony.
Being possessed of a financial and administrative system
of their own, the burgesses were in a condition to develop
further their system of indirect taxes. The customary direct
tax came to be regarded as more and more oppressive, and
every efifort was made to supersede it by increasing the cus-
toms duties. This proved to be only partially feasible, how-
ever. There was a limit to the revenues which could be
derived from the liquor duties ; the Royal African Company
would not hear of any increase of the slave duty ; and the
British government would not allow duties upon the import
of any manufactured goods. Yet the governmental expenses
kept on increasing during the eighteenth century, and the
assembly was forced to revert to its customary direct taxes.
It was at this juncture that the struggle to obtain possession
of the quit-rents occurred, with the result which we have
seen. Being denied the proceeds of this land tax, there was
nothing to do but to tax the polls whenever any emergency
arose.
In 1 66 1 the regular revenues were ^^4,200, exclusive of
the quit-rents and the general levy; by 1700 they stood at
;^4,500.^ For some years they did not increase, and at times
were even less, being but ^4,000 in 1715. Then followed
the great increase in the importation of slaves, which paid
ofif all debts and even yielded a supplus. But this was soon
cut short by the Royal African Company. After this time
the regular revenues developed but slowly with the natural
increase of population, until in 1754 they are said to have
been ;^6,500."" This paid the salaries and fixed charges,
which were ;^4,345, the surplus being devoted to the con-
^ Burkii, Appendix, iv; Oldmixon, 298; Charles Campbell's //eV/^rj' ^/ Virginia.
'•■ Dinwiddie Letters, 1755.
104
FINANCIAL HISTORY
[104
tingent expenses, along with the poll tax. This last tax
produced about ^^3,000 at this time.
The revenues of the colony, therefore, were derived
mainly from two sources, the poll-tax and the export duty
upon tobacco. The first of these was the simplest and most
natural. The second was not introduced until the latter part
of the seventeenth century. It yielded a constantly increas-
ing income, but was subject to many limitations. The direct
tax on the other hand was exceedingly elastic. The sub-
joined table' shows that it produced about one-half the
Estimated Revenue from the Poll Tax.
Date.
No.' Tithes.
Av. Levy in lbs.
of Tobacco.
Value per lb.
Fixed for Quit
Rents.
Total
in Pounds
Currency.
1632
5000
7000
7209
13000
20000
30000
38000
63000
82000
105000
153000
64
1640(1 2d.)
1644
1652
1654
1671
1645 (3d.)
1661 (2d.)
1676(1.5.)
1682(1.2.)
id.
((
(>
«
«
30
12
40 it (extra)
16
5±
4
3
I sh. (war.)
3
1802
3250
1697
1711
1722
1742
1748
1759
1772
625
633
790
1025
5250
1275
Estlmated Revenue from the Export Tax upon Tobacco.
Date.
Hogsheads Exported.
Rate.
Revenue in Pounds
Currency.
1671
1700
1740
1750-60
1770
15000
30000
30000
50-60000
70000
(^\ 2 sh.
«
«
1500
3000
3000
5-6000
7000
I05] OF VIRGINIA. 105
revenue during the second half of the seventeenth cen-
tury; that it dechned till 1750; and then was reapplied
with more vigor during the troublous times which followed.
Thus the common opinion that the revenues of Virginia
were mainly derived from indirect taxes is but partially true.
Such taxes would have been exclusively adopted without
doubt had not various external considerations prevented it
in practice.
It appears that the form of the budget was in great part
determined by outward circumstances and environment.
This is indeed natural, for it appears to be the rule in the
early history of all human institutions. Only when such
bodies become fully matured, do they begin to react upon
their surroundings ; and then it is that definite policies be-
gin to be' outlined, conditions moulded to suit the popular
will, and a complete theory of the proper end, duty and
authority of the state developed, in accordance with which
the details of administration are regulated. After the estab-
lishment of the political independence of the colony, when
it became a complete governmental entity, the system be-
came more complex. And then the modern budget ap-
peared, with a treasury balance of considerable amount, with
public debts and the development of public credit, with sink-
ing funds and like devices for meeting future obligations,
and with a definite policy of internal improvements. Some
of these features appeared in a rudimentary form during the
war of 1755. But the colony was then fresh and strong,
and the Parliament of Great Britain stood at its back, lend-
ing political and pecuniary support.^ Its real strength was
not tested until the Revolution, when all of these expedients
had to be employed. Necessity gave them birth, and being
once used they proved so efiFicient that they remained hcnce-
1 Hening viii, 334, 372.
I06 FINANCIAL HISTORY \\06
forth as permanent features of the fiscal organization of the
State.
Public Domain and Lotteries. During the later colonial
period there seems to have been no revenue derived from
the public domains. Fees were often demanded for land
patents, but they were generally illegal and extortionate in
amount, and were soon removed by the Assembly. And
while they subsisted they constituted no part of the public
income, but were absorbed by the Secretary or the Governor
as perquisites of office. The only project for a public do-
main as a source of profit, was due to Governor Spotswood,
who proposed in 1710 that the Assembly assume control of
certain iron mines. This was '* laid aside by the Assembly,"
and was never revived. During the Revolution, and for
some years thereafter, the state owned a manufactory of
arms. As it was largely a war-measure, it was of no profit
to the state financially and has no fiscal importance. Thus
it appears that the policy inaugurated by the Virginia Com-
pany of founding a definite and permanent domain for the
support of its officers was never successful. It did not
accord with the principles of popular government, which de-
mand that the executive shall always be in a measure finan-
cially dependent upon the favor of the representative legisla-
ture.
One of the most striking features of the colonial finance
of Virginia is the absence of lotteries as a means of raising
revenue. It is strange that this should be so, for the reck-
less propensity for gambling among the planters during the
colonial period has been noted by all writers on the history
of that time. In Massachusetts, on the other hand, despite
the rigidity of the moral ideas of Puritanism, the lottery was
a fiscal engine regularly employed by the General Court.
The early Virginia Company was supported almost en-
tirely at first by means of the "great standing lotteries,"
107] ^^ VIRGINIA. loy
which were drawn from time to time in the West End of St.
Paul's Churchyard.' Until 1621 these lotteries were the
" real and substantial food" by which the colony was nour-
ished.^ Yet after the time when a real government was es-
tablished, there is no mention of them until 1755. A lottery
of £6000 was authorized at that time to help defray the ex-
penses of the war with the French ; but it was so unsuccess-
ful that the time for drawing it had to be extended by the
Assembly.^ It is improbable that any considerable revenue
was obtained from this, and no others were authorized until
after the Revolution, when they were employed extensively
for many purposes.
One reason for the absence of this fiscal expedient may
have been that there was so great a disposition among the
people at large to gamble, that the Burgesses felt it to be
their duty to discourage all such habits. In 1739 the As-
sembly prohibited all private lotteries as ^' productive of all
manner of vice, idleness and immorality" in the community.*
Yet the use of them during the Revolutionary period seems
to have become general. They were soon employed for the
benefit of schools, hospitals and charities. After this time
for over a hundred years the policy of the Burgesses in
regard to them was very uncertain. Every few years they
condemned them as pernicious, and then proceeded to grant
one to some individual for a benevolent purpose. The his-
tory of the lottery, therefore, during the present century,
gives a very interesting picture of the public morals of the
people ; but it belongs to an epoch entirely different from
the colonial one. Previous to 1776 the history of this com-
monwealth is in marked contrast to that of some of the
Northern colonies.
^ Purchas's Pilgrims iv, 1773; Hening i, 108.
* Extracts from the Transactions of the Virginia Company, by Rev. E. D.
Neill, 14; Washington, 1868. ^ Hening vi, 453. */<5/^., viii, 358.
\7\ B R A ft y7
CHAPTER V.
HARD MONEY.
Early Systems. The current impression, even among his-
torians, is that hard money and specie played a very subor-
dinate role in the American colonies. A vast amount of
loose writing has been bestowed on the peculiar systems of
exchange which prevailed in different places. And much
labor has been expended in compiling histories of paper
currencies. The subject of hard money, however, is gen-
erally dismissed with the remark that it was very scarce, and
that all trade was carried on by means of wampum or barter.
It is undoubtedly true that there was a great scarcity of
any circulating medium in nearly all of these colonies. The
records are filled with complaints of the inconveniences and
abusbs which followed as a consequence ; and this is doubt-
less the mdin reason for the general impression which pre-
vails. But instead of warranting a total neglect of the sub-
ject, it is rather a very urgent reason for seeking to know the
few details which are attainable. In 'fact it is a trite saying,
that "■ it is not the Excellence, but the very defects of any
system which lead men to write of it." Because hard money
y^ was so difftcult to obtain and to keep in circulation, the ut-
most ingenuity was exercised as a matter of necessity in the
attempt to solve the problem. There is, therefore, we sub-
mit, every reason to expect that the history of the struggles
of legislators to grapple with the inexorable forces of specie
gravitation may prove of considerable scientific interest.
The very scarcity of coin and bullion served to render it all
the more susceptible to the influence of hidden forces ; the
io8 [io8
I09] ^^^ VIRGINIA. 109
effects were exaggerated by this means ; and the intimate
relations between money and trade were made more evident.
In Virginia there is an excellent opportunity to study the
question, since the customary paper money cure-all was not
applied until a late day, and then only as a matter of neces-
sity. The wisdom and moderation of her legislators led
them to adopt other expedients to cope with this universal
difficulty. And the adequacy of. their simple remedies to
settle the question is evidenced by the immunity from paper
money and depreciation which Virginia enjoyed for so many
years. It will be the purpose of this sketch to gather to-
gether the few facts which are accessible ; to search for the
real cause of this dearth of .money ; to see what remedies
were applied by the Assembly; and finally, to discover ho\v
far and in what way they were successful.
It is probable that many of the early immigrants, espec-
ially the indentured servants and children, who were sent out *
at the Company's expense, brought no money with them at >•
all. Even those who were well provided in this respect,
speedily exchanged their money for the necessary supplies
which were sent over to them from England. Yet this did j^'
not occasion any inconvenience at first. The communistic
system which prevailed for several years rendered the use of
any currency unnecessary, so far as the colonists themselves
were .concerned. A circulating medium was needed, there-
fore, only in dealing with the British merchants, and with the
Indians. With the latter class a species of wampum called
"■ peak or Roenoke," was used for many years.' Moreover,
the founders of the colony sent over several glass workers,
and a factory for the making of glass beads was established,
which lasted until the time of the Indian massacre. The
evils of a depreciated currency were apparent even at that
^ Beverley, History of Virginia^ iii, chap. 12.
\
I I O FINANCIAL HIS TOR V [^ I I O
early day, for the Company's orders were that '' beads being
the money you trade with the natives, we would by no
meanes have through to much vilified, or the Virginians at all
permitted to see or understand the manufacture of them."^
As to the foreign commerce, all trade was carried on through
the Cape merchants, the theory being that " by this the same
goinge for England with one hande, the price thereof may
be upheld the better." All accounts with this common
agent were kept in tobacco at fixed rates, " three shillings
the beste, and the seconde sorte at i8d. the pound. "^ Thus
there was little demand for coin in this direction.
It was the original intention of the founders of the colony
to have a special currency of their own. The charter of
1606 gave full power to establish and issue coins of any de-
nomination or weight that the Council might choose to
adopt. This provision was, however, removed from the sub-
- sequent charters, and no further mention of it occurs ; so
that it is not likely the right was ever acquired, unless tem-
porarily, during the Commonwealth. In fact, there is posi-
tive evidence to the contrary, since the Burgesses petitioned
the Privy Council in 1631 to issue a special coin for them.
^>>They asked, moreover, that it be debased twenty-five per cent.,
in order that it might more readily be retained in the colony.'
We know that the right of mintage was strenuously denied
in Massachusetts a few years later, and the same view of the
powers of the colony in Virginia was probably held.
There was a general reaction after 1630 from the system
of using tobacco as the universal medium of exchange and
account, which had been so eagerly accepted at first. It
had been based upon the presumption that the price of to-
bacco was a constant quantity. A few years' experience
'For a full history of this matter see Purchas's Pilgrims iv, 1783; Virginia
Historical Collections i, 95, 137, 151, 158; Neill, Virginia Company, 236.I
'^Journal^ 1619. ^Jefferson's Notes, ed. 1787, pg. 283.
I 1 1 1 OF VIRGINIA. I J I
proved the fallacy of this idea ; the custom "■ bread many
inconveniencies and occasioned many troubles;" and the
Assembly tried to remedy the evil. In the absence of any
new coin from Great Britain they could not abolish the old
tobacco barter ; but they could return to the English stand-
ard for their money of account. Tobacco, as we have seen,
had fallen in value, and was in no wise suitable for this pur-
pose. The Assembly, therefore, enacted that the estates of
all decedents should henceforth be reckoned in EngHsh
money and not in tobacco.^ In 1633 this provision was
likewise extended to all contracts, bargains, pleas and judg-
ments.
The Mint Project. During the succeeding decade all of the
various inconveniences incident upon an excessive produc-
tion of tobacco made themselves keenly felt. Numberless
regulations were imposed upon the culture of this staple in
a vain attempt to uphold its price. Money was exceedingly
scarce, and creditors often demanded extortionate rates for
commuting money debts into tobacco. This became so com-
mon that an act of 1642 declared all money debts contracted
in future to be non-recoverable at law. This, however,
proved to be too drastic a measure, so that it was soon re-
pealed.^ But in the next few years tobacco fluctuated so
enormously in price that once more the Burgesses were com-
pelled to recognize that it was not a proper standard for ac-
counts. It happened that at just this time the poHtical con-
nections with Great Britain were somewhat relaxed ; in fact
the colony was virtually independent during the Common-
wealth period. There was no longer any question of author-**
ity ; and the Assemby resolved to establish a metallic cur-
rency of its own.
The motive for the enactment of this law was the consid-
^Hening i, 170. "^ Ibid., i, 262 j ibid., 47.
I 1 2 FINANCIAL HIS TOR Y [ I I 2
eration, " How advantageous a quoine current would be to
this colony, and the great wants and miseries which do daily
happen unto us by the sole dependency upon tob'o." ^ "The
only way to procure the said quoine, and prevent the further
"■ miseries" was to raise the value of the Spanish pieces of eight
to six shillings, with the smaller coin proportionably thereto.
Thus the bullion which would be needed for the supply of
the mint was to be attracted to the colony.
There was not much commerce between Virginia and the
Spanish West Indies. The two were competitors so far as
tobacco was concerned. Their productions were much the
same, with the sole exception of sugar and molasses. It is
probable, therefore, that this measure was directed toward
\ the New England colonies, rather than toward the Spanish
'^Vnain. These Yankees had carried on an extensive trade
^. with the colonies of Spain, despite all the regulations of
Great Britain's colonial policy.^ They carried fish and lum-
ber to the South, and received sugar, molasses and rum in
return. At this time they held almost a monopoly of the
trafific, although New York and Pennsylvania soon became
serious competitors.'' There was, however, comparatively
little demand for Virginia's products in the South ; and a
far better market was to be found in New England. For
twenty years there had been a very considerable coasting
trade between the two sections.* Provisions as a rule com-
manded a higher price in Massachusetts than in Virginia.
Wheat had ranged from five to six shillings a bushel there
previous to this time, whereas it could be procured in Vir-
ginia for about four shillings of the same money .^ Beef was
also somewhat cheaper in the Southern colony, being two
^ Hening i, 308. '■^ Ibid., ii, 516.
8 JSfew York Colonial Documents, v, pg. 686.
* Weeden i, 207, and Doyle, 205.
^ Weeden : A Perfect Description of Virginia, 1648, reprinted in Porce.
113] OF VIRGINIA. ' 113
and one-half pence a pound, as against three pence in Massa-
chusetts. Consequently the Yankee coasters exchanged
salt-fish and the sugar and rum of the West Indies for these
products of Virginia.
There had long been a considerable amount of silver coin ^
in circulation in Massachusetts. Not only was it the result of
their legitimate trading, but a good deal of bullion was also
brought in by freebooters from the Spanish main.^ And it >
is probable that this legislation in Virginia was an attempt
to attain the same result which Massachusetts herself accom-
plished by the establishment of a mint in 1656. The cus-
tomary rate at which the piece of eight had passed there
was five shillings ; and the rest of New England followed
this example."^ And it appears that this bid of six shillings
the piece for it in Virginia was a direct premium of a shilling
put upon the import of each coin. New York was of little
importance as yet,- and there was therefore no other place,
except New England, where money could be procured.
Virginia wanted the silver and was willing to pay an extra
price to procure it. *
The Assembly then resolved that " the said quoine will
not continue with us unless we have a leger quoine.'' They^
therefore forbade all exchanges for tobacco in order to cre-
ate a demand for small change, and made absolute forfeiture
of all the goods so bought or sold the penalty for such
trading. To take the place of this customary medium of
exchange they resolved to import 10,000 pounds of copper
at a cost of £yS0 sterling, to be paid for in tobacco at one
and one-half pence a pound. Every pound of copper was
to be coined into twenty shillings in currency, with an al-
^ Brodhesid's I/is^ory 0/ JVezu Yor^, i, SS5> "> 525.
2 Weeden, 142; T/ie Republic of New Haven, by C. H. Levermore.
' New York Historical Collections, Second Series, ii, ■^^TfT,'
114 FINANCIAL HIS TOR Y [ I 1 4
lowance of twelve pence per pound to cover the cost of coin-
age. These coins were to be of the denominations of two,
three, six, and nine pence, respectively ; and the whole issue
was to be redeemed annually in new coin of a different de-
sign, so as to prevent all counterfeiting. This elaborate
plan apparently came to naught.' It is interesting, however,
as being the first complete project for a mint in America ;
it may be that it served as a model for Massachusetts in
1656, and for Maryland in 1662.
Not only was the mint project a failure ; it was also found
that six shillings was too high a price to offer for the Span-
ish piece of eight. Consequently its value was reduced once
more to five shillings. Nevertheless, this lower price was
extended to cover all money of whatever metal, that is to
say, however debased, in the hope that some coin at least
would be attracted.*^ This naturally put a premium on the
importation of light and counterfeit pieces, so that the circu-
lating of all false coins was finally prohibited in 1657. This
expedient having failed, a new method of preventing the
scarcity of money was next adopted : to wit, the prohibition
of the export of all coin above the sum of forty shillings.^
And this prohibition was continued from time to time dur-
ing the colonial period. Doubtless it was completely inop-
erative, but it came to be enacted as a matter of course, so
long as the scarcity of coin existed. It is curious, however,
that the colony should have first prohibited the export of
money at just about the same time that the mother country
removed her prohibition of the export of bullion.
Regulation of the Value of Money by Law, The coin of
most general occurrence in all the colonies was the Spanish
piece of eight. For this reason it may best serve as a stand-
' Chalmers, History of the American Colonies, i, 248.
2 Hening i, 410. ^ Ibid., 493; and ii, 125.
1 1 5 ] OF VIRGINIA. 1 1 5
ard of comparison in a study of the legislation by the differ-
ent colonies on the subject of silver. The rate or value fixed
upon this serves as a rough indication of the relative values
at which all the foreign silver coins circulated in the colonics.
It may be used also as showing in some measure the relative
scarcity of coin in different localities, since a high valuation
presupposes a considerable demand, other things being equal.
For some reason there was an unusual scramble among
the colonies for coin in the period after 1670. In 1671,
Maryland attempted to raise the value of the piece of eight
to six shillings, by setting an artificial premium upon it.^
New York received it at six shillings in 1672, although this
was increased to six shillings nine pence in 1676, at which
it remained till the emission of paper money .^ Massachu-
setts raised its value from five to six shillings in 1672,' or to
six shillings eight pence if it weighed an ounce.* It passed
in New Jersey four years later at seven shillings eight pence.
And yet the customary valuation of it in Virginia was but
five shillings.^ We shall see that attempts were made to
increase its value ; but these all proved fruitless. The only
other colony which had so low a standard was Carolina,
where it passed for five shillings until 1683, when its value
was raised for the first time.^ Virginia, however, did not
1 A. law of 1686, and another of 1708, fixing the value of the piece of eight at
6 shillings, is mentioned by Scharf, History of Maryland^ ii, 35. Yet Blair and
Chilton declare it to have been 4 sh. 6 d. in 1697, ^^ ^^^^ Hickcox, A History of
the Bills of Credit or Paper Money issued by New York, 10. Probably the one
was currency, the other sterling, the difference being fixed at 333^ per cent.
Archives, 1671.
^ Historical Society, First Series, i, 424.
*Felt, An Historical Account of Massachusetts Currency, 41-3.
* Hickcox, An Historical Account of American Coinage, 9.
^ Hickcox, A History of the Bills of Creditor Paper Money issued by New York,
10; Oldmixon; and Blair and Chilton.
^Hickcox, op, cit. 10; Carroll's Historical Collections of South Carolina, ii, 317.
I 1 6 FINANCIAL HISTOR V [ I 1 6
vary the standard price of this coin until the next century,
when a law of the sixth Anne declared that it should pass
for six shillings in the colonies.' The New England currency
passed at its nominal value, as was customary in all the
colonies.^ Maryland so ordered it in 1671 ; New York a
year later; and the smaller colonies followed suit. Yet this
was debased two pence in the shilling below the English
coin. Thus while on a par with the other provinces so far
as this native coin was concerned, Virginia was at a decided
disadvantage in respect to all the Spanish money.
The inauguration of this policy of regulating the value of
money by statutory enactment raised anew the question of
the constitutional separation of powers among the branches
of the government. The drain of coin was so serious, by
reason of the premium offered by other colonies, that the
Assembly in 1681 petitioned the king to enhance the value
of this silver money by twenty-five per cent. Moreover, they
agreed to pay the export duty upon tobacco in money if this
were done.^ The Governor held obstinately to the opinion
that this was an exclusive prerogative of the Crown, despite
all protests raised by the Assembly ; and he certainly had the
authority of his official instructions.* He, therefore, in 1683,
proclaimed that the value of the crown, rix dollar, and the
piece of eight, should be raised from five to six shillings.
Yet the quit-rents, which were the Royal revenues, and the
export tax upon tobacco, from which the Governor's salary
was paid, were to be exempted from the provisions of the
proclamation. Naturally, the people refused to obey this
arbitrary measure ; and this so strenuously that the procla-
tion was withdrawn. It is said that the government was
' Phillips, Historical Sketches of American Paper Currency, i, 31.
'•^ Oldmixon; Blair and Chilton. •'' Sainsbury MSS.^ ix, 106.
*Burk ii, 237; McDonald MSS., vi.
117] '^^ VIRGINM. I I 7
considerably in arrears for the payment of the soldiers;' and
that the Governor took advantage of this little ruse to pro-
cure a quantity of light pieces of eight. These, it is averred,
were bought during the period of enhanced value of the full
weight coin, and were used to discharge these standing obli-
gations. Whether this be true or not, it is impossible to as-
certain. It must be confessed, however, that there was
apparent justification in the existing low valuation of this
silver for enhancing its price. The early revocation of this
measure, due to the opposition of the people, may indeed
have offered a chance for a little speculation to designing
debtors. But it is our opinion that the version of the affair
given by Beverley may be somewhat unjust."^ It is certain
that this act so harshly condemned was actually carried out
some years later, to the manifest benefit of the colony.
But for this time the question of authority proved of more
importance, and the matter was left unsettled.
The same dispute occurred under Lord Howard, who suc-
ceeded Governor Culpepper. His instructions contained
the following clause : ** You shall not upon any pretence
soever permit alteration in the value of coin without our
approbation." ^ There was much fraud at this time in the
payment of the Royal revenues, and it may be that the Gov-
ernor merely desired to secure a plenty of specie in circula-
tion, so that he might enforce the payment of these in
money. At all events he petitioned the Council in England
in 1686 that power be conferred upon him to alter the rates
^ Beverley, History of Virginia.
'■^Culpepper's report to the Board of Trade, September 20th, 1683, puts a differ-
ent light on the matter. He writes : " I referre my selfe to the proclamation w"*^
I issued forth at the Earnest Instance of the Councell, and to the Generall satis-
faction of the country, though not to my owne ; For I neither beleeve it will pro-
duce the advantage as Expected," etc. McDonald AISS., vol. vi.
» McDonald MSS., October 24th, 1683, § 75.
1 1 8 FINANCIAL HISTOR Y [ j j g
of exchange for the various coins.^ The matter was referred
to the Royal Commissioners of Customs, who reported ad-
versely upon it."^ They declared it the wisest poHcy to allow
money *'to rise and fall according to the scarcity and
plenty;"^ and they refused to agree to the proposition, even
though the rates were changed in due proportion, fearing it
might prove too great a temptation to fraud. As a conse-
quence no further attempts of this nature were made, and
henceforth in theory the rates at which coins should pass
were fixed by the Council in England.
The only other legislation in regard to money in Virginia
for thirty years consisted of acts necessary to secure pay-
ment of the quit-rents and export duties in specie.* The
rates at which commodities should be received in barter,
where specie or tobacco could not be obtained, were fixed
from time to time.^ This precaution was particularly neces-
sary whenever the tobacco crop was artificially curtailed, to
prevent the extortion of creditors in demanding tobacco at
the lower rates of exchange, which ruled before the restrictive
acts. The assembly always had a care for this ; and the
debtor's interests were generally well represented in the
legislation of this period.
Thus far it appears that the subject of money really ab-
sorbed a considerable share of legislative attention during
the seventeenth century. In fact there is reason to believe
that in the tide -water region at all events, there was a con-.
siderable proportion of specie current. In the interior there
was -probably little. Various commodities were used in-
stead of money, as for instance " best winter beaver, killed
^ McDonald MSS., vol. vii, August 22nd, 1686. ^ Sainsbury MSS., xi, 39.
^ McDonald MSS., ibid. * Hening ii, 186, 283, 427.
^ In 1682 the prices of twenty- three commodities were fixed by law. These be-
ing rated in money as well as in tobacco, the inference would be that some fair
amount of money was current. Hening ii, 507.
1 1 9] OF VIRGINIA. IICj
in season," which was received for quit-rents at a certain rate
per pound/ Yet despite such substitutes for money, the
need for some portable and stable medium of exchange was
doubtless very great. There are always numberless transac-
tions which can be conveniently efTected in no other way.
This scarcity of coin occurred in a time of peace, and when
public credit was not in any way disturbed. Neither had
there been any issues of paper money af this time. Of
course either of these influences may contribute to produce
a scarcity of money ; but in the seventeenth century this
dearth of coin was due to other causes, which operated con-
stantly to limit the monetary circulation of the colony.
Causes of the Dearth of Hard Money. The first of these
influences, which was peculiar to the seventeenth century, is
rather personal and political, than economic in its nature.
This is the fact that it was the interest of the Governors of
the colony to encourage tobacco, instead of money, as a
medium of exchange. ^ And we shall see that the introduc-
tion of the system of tobacco notes was due to the enter-
prise of the chief executive. This was opposed by the
planters at first, as they were disposed to regard abundance
of money as an evidence of prosperity. But the salaries of
the Royal officials, as well as the Crown revenues, were
customarily paid in bills of exchange on London. And it
became in this way an object of interest to these officials,
>\^ho desired to save any portion of their income through
balances on their London accounts, that this rate of ex-
change should rule as low as possible. This result was
attained most effectively by keeping up the price, as well as
the amount, of the tobacco exports. Moreover, the system
of tobacco payments offered a favorable chance for a little
private speculation. The situation was analogous to that of
^ Calendar Virginia State Papers, i, i8. '^ Blair and Chilton.
I 2 O FINANCIAL HIS TOR V [ I 2 o
the silver producers in the United States to-day, who are
seeking to raise the price of a certain commodity by enlarg-
ing the demand for it, through its use as money.
This official influence we believe to have been by no
means insignificant, while the Governor's prerogative was at
its height. There are instances of laws passed to regulate
the value of coin, and facilitate its use as money, which were
vetoed apparently for no other reason.^ The succeeding
century, however, was affected to a less degree, for two
reasons. The introduction of the tobacco notes in large
part superseded the necessity for a metallic currency. And,
secondly, the Governors were gradually relegated to a sub-
ordinate position, so far as initiation in legislation was con-
cerned, so that their personal interests became of less
importance.
The other causes of this lack of money are economic in
their nature. And of these the so-called unfavorable balance
of trade with England was the most influential of all. It
operated upon all the colonies of America, and was due to
the peculiar colonial policy of Great Britain. In this unde-
veloped state of international intercourse, there was no ex-
change of credit between the colonies and the mother
country, analogous to the modern foreign investments of
capital which to-day afifect the rate of exchange so profoundly.
The main factor in the situation was the relative value of the
imports and exports, and these in the main could only be
regulated through Great Britain.
It is difficult indeed to realize the complete dependence of
the American colonies upon the markets of the mother
country for nearly every article of domestic consumption.
Attempts were made by Governor Berkeley to remedy this
state of affairs in Virginia by encouraging the growth of
J Blair and Chilton.
12 1] OF VIRGINIA. 121
certain industries after the Restoration. But the poHcy of
the eighteenth century, begun by his successors, was to stifle
every infant industry at birth/ The colonists were even
denied the privilege of making their own clothing, when the
low price of tobacco would not enable them to purchase
British goods. And every effort was made to prevent the
least independence of action,'- so that by complete economic
subjection, the political supremacy of Great Britain might
stand secure.
In Virginia, of all the American colonies, the conditions
were favorable to. the utmost development of this policy.
There were no towns, despite the vigorous attempts to en-
courage "■ cohabitation," so that the advantage of concerted
action was largely denied, in extorting favorablo terms from
the English merchants. Each planter was obliged to deal
separately with some chosen agent in London, who shipped
goods to him in return for his consignments of tobacco. For
the whole colony was virtually dependent upon this one
staple, their early trade in lumber, hoops and staves having
been ruined by the Northern colonies.' We have already
seen how onerous were the customs duties in England ; and
these burdens were greatly increased by the commissions
demanded by these factors. Petty charges for '* Tret,"
*'Clough," ** Draught" and ''Sample" were imposed, often-
times to the extent of fifteen or twenty shillings a hogshead.*
They even went so far as to charge three pence a hogshead
for many years, without the consent of the planters them-
selves, " to defray the expenses in applying to Parliament
upon any occasion to relieve us (Virginia) from the hard-
ships we groan under."
' Beverley. - Calendar Virginia State Papers, i, 124. ^Oldmixon.
♦ A clear statement of these abuses is given in a rare pamphlet entitled : The
Case of the Virginia Planters of lobacco, and A Vindication of the Said Rep-
resentation^ published at London in 1733.
I 2 2 FINANCIAL HIST OR V [122
From these exactions it was impossible to escape in many
cases, because the planters were so heavily indebted to the
English merchants. The system of keepfng open accounts
in London was calculated to encourage extravagance ; and
these accounts were habitually overdrawn. Many of the
merchants even made it a rule to encourage this indebted-
ness, so as to assure the continuance of their customers. It
gave them a certain advantage in all their dealings with fhe
planters. The luxury and extravagan-ce of these men as a
class was undoubtedly fostered, if not caused, by this con-
tinued influence.^ Once firmly in the grasp of the merchants,
extortionate prices were charged for everything, which were
often double the quotations at New York or Philadelphia.^
Thus when -it is considered that everything except food was
purchased in this way,'^ it is plain that it was a considerable
factor in producing an unfavorable balance of trade with
England.
Being, therefore, obliged to exchange their tobacco at a
low figure for goods which wfere charged at an exorbitant
rate, there was a steady excess in the value of the imports.
And the only way in which this liability could be discharged
was by remittances of specie, or by bills of exchange, which
amounted to the same thing. As fast as any coin came in
from New England in exchange for wheat, or from the
Spanish colonies, it was bought up and shipped to England.
During the latter part of the century, moreover, a drain
upon the Virginian stock of coin commenced in another
quarter. The new commercial colonics of New York and
Pennsylvania began to attract a large foreign trade. And
^ McM aster, History of the People of the United States, i, 273.
'^ A letter of George Washington enumerating the supplies which he needs is a
good example of this. The list includes every article of luxury or necessity, from
a bust of Alexander the Great to a half dozen halters. — JVritings, edited by W. C.
P'ord, vol. ii, 127, 1*34, et seq.
123] 'of VIRGINIA. 123
the demand for specie there was greater than in Virginia ;
for not only did they need it to ship to England, but they
also required a large supply in order to carry on their do-
mestic exchanges. Philadelphia was bountifully supplied
with money, even more so than England, it was said,^ in
1696. And this supply was largely obtained at the expense
of Maryland and Virginia, and even of Massachusetts.-
M^ryland, for many years a rural community like Virginia,
although setting a higher price upon silver, was well sup-
plied with money. She was even more fortunate in this, re-
spect than her neighbor, and interposed to protect Virginia ^
from an excessive drain of specie. Yet even here there was /^
a gradual tendency to attract coin on account of the higher
price, which continually lessened the Virginia stock. Their
relative condition is expressed by a contemporary as fol-
lows : In Maryland '* they have Spanish and English money
pretty plenty, which serves only for Pocket money, and not
for Trade" ; but in Virginia ** gentlemen can hardly get
enough for travelling expenses, or to pay tailor's and trades-
men's wages.""* As for Delaware, there was a goodly in-
come of specie from the proceeds of her fishing trade, which
was considerable.^
On the whole, therefore, we find that although the Gover-
nor's influence in restricting the supply and circulation of
money declined during the 17th century, other conditions of
trade and commerce were developing to produce the same
result. The sphere of action of economic forces was broad-
ening ; and it was becoming too powerful to be affected by
the interests of any single individual. And, moreover, the
causes producing the scarcity of specie were becoming more
' Walton's Annals of Philadelphia^^.
'^ Blair and Chilton; and Alsop's Maryland.
" Oldmixon, 315; and Bozman's History of Maryland^ i, 275.
^Description of A'ew Albion, Force's Tracts, ii.
124 FINANCIAL HISTORY [124
apparent. The Council in England finally took up the mat-
ter, and endeavored to settle the difficulties. And Virginia
was at last forced to fall -into line with the other colonies,
and join in the scramble for hard money. For a half cen-
tury she had held back, and been stripped of money for the
benefit of her neighbors. The move of the home govern-
ment was the signal for action, and henceforth Virginia be-
came a factor in the situation.
The Monetary Policy of the Eighteenth Centnry. During
the seventeenth century it had been sufficient for all ordi-
nary purposes to regulate the value of money by the piece.
This, however, was not adapted to the more complex condi-
tions of trade which were fast developing, and many abuses
had been produced. Many of the coin in circulation had
been so clipped and mutilated as to have lost most of their
original value. The dift^'erent varieties and alloys had also
become greatly confused. For instance, the new Seville
piece of eight, containing but 308.7 grains of pure silver, had
been issued, which circulated side by side with the old
Seville piece of .387 grains fine. As early as 1676, Governor
Culpepper preferred to have " the price sett on the ounce,
that is certain, and not the piece. For none but extreme
light pieces will be brought in, and that (when brought in)
with some gain to the importer but loss^ to the country." •
Twenty years later the same defect in the law is mentioned,
it being the practice of many, especially the tax collectors,
who preferred to take tobacco at a valuation below the
market price, "to scruple a light piece of eight, affirming it
is clipped, or a Peru piece and not good silver, and no other
coin is ascertained except English, of which there is very
little.""' Petitions were also presented praying for a law to
" ascertaine at what valine the said (Dog) DoUers may pass
^ McDonald MSS., vi. ' Blair and Chilton.
125] ^^ VIRGINIA. 125
currantly from man to man, for ye better advancement of
Trade and Commerce."^
Still another difficulty in the way of regulating the value
of current coins by the, piece lay in the Act of the 6th Anne
(1708), which had already strictly defined the value of the
Spanish money. This law, to be sure, was of no effect; but
it acted as a check upon legislation. A bill of the Assem-
bly of New York was vetoed for this reason mainly, in 1768,'^
and there is reason to believe that the other colonies were
restrained in like manner.
All of these difficulties were avoided by changing the laws
and setting the price of money by the ounce or pennyweight
without reference to its denomination. This practice was
followed by nearly every one of the American colonies dur-
ing the eighteenth century. For a time these values con-
formed to the ones assumed by the 6th Anne, namely six
shillings ten pence per ounce; but gradually the peculiar
conditions of each separate colony led to a departure from
this figure. And the governors seem to have acquiesced in
it, as there is no record of a veto on account of conflict with
any law of Parliament. Yet although the method of regulat-
ing the value of money was changed, there was no abate-
ment in the active competition between the colonies for the
current coin. The same bidding was carried on in this new
^A petition presented in 1697 runs as follows: "That wheras, muney, being
made of Currant Vallevv, it is the only and most Convenient Ballance for carrying
on all Trade and Commerce, and forasmuch as Experience Informeth us that our
neighboring provinces by enhancing The Vallew of all foran Quoine, Do Draine
from this Government such muneys as by severall opportunity Doth Happen to
be brought among us; We Tharfore propose That a Certaine Vallew & Advance
may be sett, not only upon Dollars, but upon all sorts of foran quoine which may
Excede the Vallew of gt. Sterling, Which would tend much to the Incouragement
of Tradesmen who are at p'sent discouraged by Reson, are forced (If Deale at
all) to Do it mostly upon trust." — Calendar Virginia State Papers, i, 53.
'^ Hickcox, A History of the Bills of Creditor Paper Money issued by New York,
44.
I 2 6 FINANCIAL HIS TOR V [ I 2 6
form, that is to say, by fixing the price by weight and not
by the piece. It is, however, extremely difficult to compare
these prices, owing to the fluctuations of the paper curren-
cies and the difTerent values of the shilling in the various
colonies.
The price per ounce for silver-plate in Massachusetts in
1672 was six shillings eight pence ;^ in 1702 before the de-
preciation of its paper currency it was six shillings ten and a
half pence ; the act of the sixth Anne established it at six
shillings ten pence.^ Pennsylvania previous to this time had
bid as high as eight shillings two pence per ounce for it,'
although in 1709 it had temporarily conformed to the British
valuation, by rating it at six shillings ten and a half pence.
As no paper was issued here until 1723, it is probable that
depreciation may be disregarded ; and the piece of eight was
still reckoned at five shillings, or even less,* so that the unit
was the same as in Virginia.^ The valuation in New York
was often as high as seven shillings six pence per ounce, com-
puting the piece of eight at nine-tenths of an ounce.*' In
South Carolina the price had been six shillings three pence
per ounce previous to 17 10, with the shilling equal to the
Virginia rate of five to the dollar.^ The price in Maryland,
assuming the piece of eight at nine-tenths of an ounce, and
reducing it to the Virginia shilling, must have been below
six shillings."
This was the condition of affairs when the Virginia Assem-
^ Hickcox, An Historical Accotcnt of American Coinage, 9.
' Phillips, Historical Sketches of Aynerican Paper Currency, i, 153. '^Ibid., i, 19.
^ Ibid., \, 12-13.
^Oldmixon, 315; Hickcox, A History of the Bills of Credit or Paper Money is-
sued by iVew York, lo.
*^ This computation is based on data in Phillips, i, 27 and 109; Felt, 59; and
American State Papers, Finance, i, pg. 104, et seq.
^Carroll, Historical Collections of South Carolina^ \\, 258. ^Vide note, p. 115.
J 2 7] OF VIRGINIA. 1 27
bly met in 17 10. We have seen that the price set upon the
piece of eight had been much lower than in the other colon-
ies, with the inevitable result that coin was more scarce in
Virginia than elsewhere. At just this time, there was con-
siderable depression in the tobacco trade, and this scarcity
of money was increased by the -necessity of large exports of
silver. Petitions were presented for commutation of money
debts to tobacco, so great was the scarcity of specie.' These
were refused, but it was seen that something must be done.
The matter was not simple, however, " the great Difficulty
being to Settle a Currency without prejudicing her Maj'tie's
Revenues."'
To remedy these evils the Burgesses, ostensibly in pursu-
ance of a proclamation issued by Queen Anne in 1704, or-
dered that all pieces of eight. Pillar Ducatoons, *' Eccus of
France or Silver Lewis and all halves, quarters and lesser
pieces of the same," shall pass at the rate of six shillings
three pence the ounce. Peru pieces and the like were rated
somewhat lower.-^ This was virtually raising the value of the
full-weight Spanish dollar from its customary rate of five
shillings, to about five shillings eight pence. 1 In fact, it is
but a repetition of the attempt made by Governor Culpep-
per in 1683. It was likewise provided that this new regula-
tion should not affect the rate of settlement for all foreign
debts, or for the Royal revenues. A special clause was in-
serted, which exempted all such payments. It is probable
that the consent of the Governor was obtained only upon
this condition ; and thus alone was *' the great difficulty"
avoided. This was certainly the case in other proprietary
colonies, and the same interests had to be conciliated in
Virginia. Therefore, we see the people and the Assembly
^Calendar Virginia State Paper s^'x, \d^^. '^ Spoiswood Letters.
^ Hening iii, 502.
1 2 8 FI.VAiYCIAL HIS TOR Y [ I 2 8
agreeing to precisely the same act, which was so stoutly re-
sisted a quarter of a century earlier.
This law placed Virginia in a more favorable situation to
compete with the other colonies. She was on terms of
equality with her southern neighbors, as we have seen. The
price offered for silver was not much, if any, less than that
which prevailed in Maryland. And both of these colonies
could afford to rate silver lower than the Philadelphia figure,
for the foreign demand for it was much less. Here in Vir-
ginia the rate of exchange varied from twenty-five to thirty
per cent, premium, while in the great seaports it ruled from
sixty to ninety per cent above par. Moreover, there was less
demand for money in domestic trade. Thus Virginia could
afford to stand somewhat aloof from the scramble for specie,
as in fact she had done previous to this time.
The depression of the tobacco trade continued until 1714,
and coin was still much needed. It was the demand for
currency at this time in fact which indirectly led Governor
Spotswood to introduce the tobacco notes. The silver ques-
tion had been settled for a time, but now it was discovered
that the values of the gold coin . in circulation were " un-
settled, disproportionate to others of the same intrinsic
value, and all unequal to the coined gold of Great Britain."^
Of course, we know that it was the currency standard and
not the gold which varied, but this was not appreciated at
this time. Gold was, however, to be accepted in exchanges
by the provisions of this act at five shillings the penny-
weight.
Most of the colonies had overvalued gold previous to the
law of Parliament of 1708. South Carolina rated it at six
shillings three pence per pennyweight in 17CO."" In Penn-
sylvania, the price was seven shillings per pennyweight from
' Hening iv, 51. "^ Carroll, Historical Collections, ii, 258.
129] ^^" ^^^^G^^'^^JA' 129
1700-9, and the ratio to silver was fifteen and two-tenths to
one. In 1709, however, this was reduced to five shillings six
pence per pennyweight, and the ratio to silver became six-
teen to one.^ These values were reckoned in shillings at
five to the dollar then, and since no paper had yet been
issued, there was little correction for depreciation. This
ratio, sixteen to one, was adopted by Virginia in 17 14, but
the values of both gold and silver were lower than those
prevailing in Philadelphia at that time. Thus there was
still a premium upon the export of coin to this commercial
centre. Yet this action was necessarily slow where coin
was so scattered as it must have been in Virginia. After
I 714, there was also a return of prosperity to the colony;
tobacco rose in price, and every one was content. More-
over, for a time, the tobacco notes were utilized ; and
although unpopular, they served as a substitute for money.
After 1720, the demand for specie in the northern colonies^
became more urgent. Commerce was rapidly developing,
and more money was needed. As a consequence, the price
offered for specie rose rapidly. It was aided also by another
consideration — namely, that the rate of sixteen to one had
undervalued silver in proportion to gold ; and this was cor-
rected by raising the price of silver. In 1730, silver was
rated at seven shillings five pence per ounce in Philadel-
phia," at which rate it remained until the emission of the
first paper money three years later. And then it rose to
eight shillings three pence the ounce, the ratio to gold rang-
ing from fourteen and eight-tenths to fifteen and three-tenths
to one. In 1 716, in New Jersey, silver was at eight shil-
lings per ounce.'^ New York rated it at this same figure
in 1 71 2, although it apparently commanded eight shillings
^ Phillips, Historical Sketches of American Paper Currency, i, 19.
2 Phillips, op, cit, i, 19. ^ Ibid,.) i, 61.
I 3 o FINANCIAL HIS TOR V [130
six pence in 1723.^ Thus it appears that in Virginia not
only was gold rated at a lower figure than in the other col-
onies, but also, since the ratio to silver was abnormally high,
that this latter metal was doubly depressed in value.
In February, 1727, an act was passed to remedy this mat-
ter and to bring ''silver coin to a nearer proportion to that
of the gold currency." It was stated that the value of this
silver coin was greatly disproportioned to the value at which
the coin passed in the neighboring plantations.'- The ounce
of silver was raised in value from six shillings three pence,
fixed by the law of 17 10, to six shillings eight pence, thus
making the rates to gold nearer the customary figure of fif-
teen to one.-^ The English crown was likewise raised in
value from five shillings ten pence to six shillings three
• pence. The only provision in regard to gold was to pro-
hibit the circulation of all clipped coin as money. This was
intended to check the currency of base metal and counter-
feit pieces.
The only other legislation during the colonial period in-
tended to attract specie, was a provision inserted in the rev-
enue acts after 1726. The duty upon slaves was paid by the
purchaser, and not the importer, it will be remembered.
And an allowance of fifteen per cent, was made to all who
paid for the slaves so purchased, in money which they them-
selves had imported. This customary allowance remained
in force until 1781, when it was increased to twenty-five per
cent. It was thus but a part of the general fiscal policy of
the colony, which had induced the prohibition of the export
of money at an earlier day. The need of money also led to
the passage of various laws to provide for the coinage of
copper money, whenever the King should see fit to provide
' Hickcox, A History of the Bills of Credit or Paper Money issued by N^ew York,
II and 20-1. •^ Hening iv, 218.
■' Laughlin, History of Bimetallis?n in the United 5/tf/<?j-, Appendix ii.
131] OF VIRGINIA. 131
for it. This provision of the act of 1642 was re-enacted in
1726. It is probable that William Wood issued a few coins
under this law, but the amount was insignificant.^ In 1769
another law was passed to purchase ^^"2,500 of copper for
small money."' This was reduced to ;^ 1,000 in 1772; and
various inducements were ofTered to private individuals to
take it up ; but they all alike failed.'^ Jefferson in his cor-
respondence says that " in Virginia copper coins have never
been in use."
The result of this hurried survey of the legislation of Vir-
ginia, during the first half of the eighteenth century, only
confirms the impression conveyed by its previous history,
that there was really a considerable amount of money cur-
rent in the colony in normal times. The situation in fact
was rather favorable than otherwise. Virginia v/as the only
colony, except Georgia, which was not forced to issue paper
money during a time of peace. A contemporary writer in
the London Magazine of July, 1746, declares that paper
money was '' not taken on the Western Shore of Chesapeake,
where only Gold and Silver is current." As we have already
seen, the public dues were generally paid in tobacco notes
after 1730; but this custom does not seem to have been uni-
versal by any means. Some counties always paid in money,
and some were allowed to pay in coin whenever tobacco rose
above a certain price.* But those individuals who did so
pay were examined before the county courts, and their
names were entered in a special register. The difficulty
seems to have been not in procuring the coin so much as in
establishing a just ratio between specie and tobacco.
A peculiar custom prevailed for many years, whereby the
'' wages " of the Burgesses were paid in money and not in
^ Virginia Historical Collection, Neiv Sei'ies, i, 55.
'^ liening viii, 343. ^ IHd,, viii, 535. ^ Ibid., v, 169; vi, 56.S; vii, 240.
1 3 2 FIX AN CIA L HIS TOR Y ' [132
tobacco. This was first tried in 1723, when it was intended
"for the relief of the people;" and it proved to be popular
with the members of the legislature at all events, for it was
continued until the outbreak of the Revolution. It is a pe-
culiar commentary upon the disinterestedness of the Bur-
gesses that in proportion as specie became scarce the pay-
ment of money ''wages" was made more rigorous. As for
instance, until 1772, no money wag paid unless there were a
balance of ^^1500 in specie in the treasury; but at that time,
when specie was fast disappearing, payment of "wages" in
money was ordered, whether there were a balance of coin or
not.^ The special significance of this custom to us here
is- that it shows that money was habitually in circulation,
even during the period of paper currency.
The price which was fixed for silver, six shillings eight
pence currency an ounce, in 1727, was apparently about the
normal value of it at that time. It was the customary price
in Massachusetts, as early as 1672 ;" and it was the rate
which was adopted on the return to a specie basis in 1749.'^
Rhode Island followed suit in 1756.* Pennsylvania had
already in 1742 fixed the value of an ounce at eight shillings
six pence of her currency, at seven and one-half shillings to
the dollar.^ There being but about six to the dollar in Mass-
chusetts and Virginia, this value of eight shillings six pence,
was really about six shillings eight pence when reduced to
their standard. The reason why this value was finally deter-
mined upon was because it corresponded best to the actual
value of silver in the markets of the world. This price after
1750 varied from five shillings two pence to five shillings
eight pence sterling the ounce.*' And this value will be
^ Hening v, 172 and 104.
"Hickcox, An Historical Account of American Coinage^ 9.
^ Hutchinson, History of Massachusetts, 435. ^ Phillips, i, 1 1 1. ^ Ibid.y i, 27.
^Franklin's Report to the Board of Trade y February 9th, 1764; cf, Adam
Smith, Wealth of A 'ations, book i, chap, v.
133] ^^ VIRGIXIA. 133
seen to bear a relation to the price fixed in Virginia, of ap-
proximately three to four, which corresponds very nearly
with the relative values of the shilling *' sterling," and the
shilling '' currency."
If then this rate of six shillings eight pence the ounce was
just about the normal figure, it probably left the specie in
circulation to adapt itself to the variations of demand and
supply easily and quickly. It was formally established as
the legal rate in 1792 again at $1.11 per ounce ;^ which
rate was not altered again by the State, since it thenceforth
became subject to the laws of the United States. • This was
a little above the old figure of six shillings eight pence, for
the Virginia dollar had been equal really to less than six
shillings. JefTerson tells us that the first sign of the depreci-
ation of the Virginia currency during the Revolution was the
rise of the dollar to six shillings." It had formerly been
computed at five shillings nine pence, although it passed for
six shillings in trade. In 1782, however, the rate of six
shillings to the dollar was made the legal ratio,"' and it so re-
mained until 1850.
It remains now to deal with the value of the gold coin,
which was fixed in 17 14 at five shillings per pennyweight.
The value of silver as compared with gold seems to have
risen steadily during the period from 1700 to 1760. In 1700
the ratio was about 15.27 to i,and it fell to 14.56 to i by the
middle of the century. After this time it rose again to about
14.76 to I by 1790.* This relative change in value does not
seem to have afTected the price of silver in Virginia as w^e
might expect. Instead of this, the value of the gold coin
was proportionably advanced. The rate of five shillings was
raised in 1782 to five shillings four pence the pennyweight;^
' Hening xiii, 477. "^ N'otes on Virgitzia, 285. ^ Hening xi, 117.
*Laughlin, History of Bimetallism in the United States, Appendix ii.
" Hening xi, 117.
I 34 FINANCIAL HISTOR V [ 1 34
and in 1798 the dollar was worth twenty-seven grains, which
is about the san:e price. ^ This would be about four pounds
sterling per ounce, while the price in England was about
three pounds seventeen shillings six pence.'' Gold was thus
overvalued in relation to silver, the ratio being sixteen to
one ; while the true proportion was less than fifteen to one,
as v;e have seen. This was indeed in accordance with
Jefferson's theory, for he desired to '' lean to a proportion
somewhat above par for gold.""* Spain established the ratio
at sixteen to one, and our considerable commerce with her
colonies Avould naturally lead to the adoption of their stand-
ard ratio.
Of course during the Revolutionary period all specie was
banished from circulation by the issue of paper money. But
coin was brought into Virginia in considerable quantities by
Rochambeau's army and the French fleet. It is estimated
that there was above ;^i, 500,000 sterling in the colonies in
French money alone, at the close of the war.* It was even
used by the people as ready change; the Marquis de Chas-
tellux observed that it was so plentiful as to be used as
" cock-fight money." But this soon disappeared, and in
1788 Warville tells us that the small expenses of town fami-
lies were doubled because of the lack of hard money and
change. The dollar was cut into three pieces, each of the
two outsides passing for a half dollar. The cut coin was
everywhere seen, and was known as "sharp shins. "^ In 1786
Madison wrote that '' the internal situation of this state in
growing worse and worsen — our specie has vanished."** This
evil was however corrected soon after the adoption of the
Constitution. In 1795 the currency of all cut silver and
^ Shepard''s Statutes^ ii, 84. ^ Adam Smith, Wealth of Nations^ book i, chap. v.
^ Laughlin, History of Bimetallism etc., 11. ^ Chastellux, Travels.
^yicMQ.%iex, History of t/ie United States, \\, 12. ^Letter, May 12th, 1786.
135] ^^ VIRGINIA. 135
clipped coin was prohibited, and the Assembly resolved that
it should all be sent to the United States mint for recoinage.^
Henceforth all participation of the state in the regulation of
money ceased, and the Federal Government assumed the
burden which had been so wisely borne by this Common-
wealth.
The Value of the Virginia Shilling. One more question
in regard to Virginia's money demands our attention. How
did it happen that six shillings made a dollar? This value
is found nowhere else except in New England. Virginia's
neighbors differed widely from her in this respect. In Penn-
sylvania and Maryland, on the north, the dollar equalled
seven shillings six pence, while the North Carolina and New
York shilling was worth one-eighth, and not one-sixth of a
dollar. To be sure, the law of the 6th Anne declared the /
precursor of the dollar to be equal to six shillings of colonial
currency. But this does not explain why Virginia stands
alone among the southern colonies in adopting this ratio.
It could not have been due to political afhliations merely,
for Massachusetts, the most independent of all the colonies
perhaps, adopted the same value for her shilling.
The special importance of the matter lies in the fact that
these values persisted as a legal money of account long after
the adoption of the Constitution.*^ In fact the fractional cur-
rency itself remained in circulation in rural districts until the
act of 1853, which reduced the value of subsidiary coins,
drove them out. Nothing but the names remain to-day, as
the ''Yankee ninepence " (12^ cents) and the ''York shil-
ling." Yet these names are the relics of certain actual coins
which served as a medium of exchange for our forefathers. .
In Virginia there were two distinct moneys, the pound ster-
ling, ejqual to the English coin, and the pound currency, con-
^ Shepard, Statutes, i, 233, 284. ^ Shepard, Statutes, ii, 44.
1 3 6 FINAXCIAL HIS TOR V [ I 3 6
sisting of foreign coin, which was reckoned at $3.33, or about
two-thirds of a pound sterHng. In conformity with this pro-
portion the shilHng currency was worth 16^ cents, and a
nine-penny piece equalled 1214 cents. Thus it took six
shiUings to make a dollar when that unit was adopted in
1791.
Two reasons for this diversity of values among the colon-
ies have been advanced. The one which is commonly ac-
cepted, is that it is the result of an arbitrary fixation of the
value of certain moneys by the colonial legislatures, in order
to attract or retain as large a share of the coveted coin as
possible. The theory is that since this arbitrary value was
maintained constant for some time, it gradually won adoption
as the proper rate and has persisted in custom even after the
repeal of the laws themselves. Now this theory may be
plausible enough as an explanation of the process, but it
does not touch the ultimate cause. It does not explain why
these values were so different, if the desire for a specie cir-
culation was equally great in the various colonies. If the
legislature of Georgia could, successfully affix and maintain
a value of twenty cents to the shilling, why was Virginia
compelled to stop at a valuation of twelve and a half cents
if she needed the coin? It is presumable that the Assem-
blies of both these colonies were equally provided with leg-
islative energy, and with ink and paper. But it may be
urged that Virginia perhaps was too conscientious or too
wise to commit herself to a policy of inflation, knowing the
inevitable result. Yet Massachusetts and Rhode Island were
restrained by neither of these considerations ; and they did
not succeed in enhancing the value of their specie. To this
first theory then it may be answered, that laws do not as a
rule make conditions, but are rather the effect and outcome
of them. There is no axiom in economic science more evi-
dent in the light of experience than that laws J?er se are
137] ^^ VIRGINIA. i^y
powerless in the long run to prevent the natural gravitation
of specie to the most favorable market. They may alter the
conditions of the market, it is true ; but these remaining
constant, they cannot hold the elusive specie. Legislation
may affect the value of money to a limited extent, as oc-
curred in Virginia in 1710 and 1727; but the change of
prices which must soon follow tends to nullify this advan-
tage. Another objection to this theory is the fact that
oftentimes these values were not made by law at all. In
Pennsylvania, for instance, the ratio of seven and one-half
shillings to the dollar was at first a convention among the
Philadelphia merchants.
The second theory by which these values of the shilling,
so different from the English standard, are explained, is that
it was the result of a depression from the standard, by reason
of excessive issues of inconvertible paper money. The old
arithmetics explained it in this way ; and many facts seem
to lend countenance to it. Yet, however true it may be for
other colonies, as in South Carolina for instance, we may
dismiss it at once so far as Virginia is concerned. In this
commonwealth there was no issue of paper money until
long after the colonial currency had become completely
differentiated from the English standard. And when treas-
ury notes were finally emitted, they were comparatively well
secured by taxes, so that their credit was generally sus- ^
tained. Moreover, the value of the shilling was hardly
affected at all, when depreciation did really occur during the
Revolutionary period.^ We conclude, therefore, that what-
ever may be true as to the other colonies, this theory is
entirely inadequate to serve as an explanation of this phe-
nomenon in Virginia.
Thus we are compelled to seek a cause behind, and in addi-
' Fide Wright's American Negotiator, Int., v, and viii.
138 FINANCIAL HISTORY [138
tion to, the apparent one which has sufficed for so long as an
explanation. Was there not a cause which, operating upon
trade in each particular case, produced the condition of
affairs which we have observed ? Even where the validity
of the paper money theory is admitted, it is probable that
there was a deeper cause which induced legislation. Might
it not have been the varying intensity of this hidden force,
which compelled the several colonies to resort to the pre-
carious expedient of paper money in the first instance —
the exteyit of these emissions being in some measure pro-
portioned to the magnitude of the force itself?
We find the explanation of this complicated problem
mainly in the inexorable conditions of the foreign trade, as it
was regulated in the selfish interest of Great Britain. The
influence of this in compelling the colonies to the issue of
paper money has indeed been recognized. But here in
Virginia we see the difference between currency and sterling
fixed long before any paper money appeared. It will be
remembered that the price of silver fixed in normal currency
in 1727 remained in force until the end of the century, de-
spite all the exigencies of the wars intervening ; and yet this
price was one-third higher than the price of silver in Lon-
don reckoned in sterling money. How did this come to be
adopted as the ratio?
The Spanish money which formed the larger part of the
coin in circulation during the seventeenth century in Virginia,
was worth from fifteen to twenty per cent, less than the Eng-
lish sterling coin;^ and sterling bills on London were ap-
parently worth about ten per cent, more than this English
money. Thus the rate of exchange on London, reckoned in
current Spanish money, probably stood at twenty-five to
thirty per cent, premium, more or less — a fact upon which
^ Hening iv, 319; Hugh Jones, p. 45.
139] ^^ VIRGINIA. 139
we hav^e already commented. The planters kept all of their
credits in London, computed at their value in that market
where they alone could purchase whatever supplies they
needed. It must always be borne in mind that there were
no towns, or seaports ; and therefore, that there was little
commercial intercourse between the planters themselves.
Each one dealt independently with his London factor; but
all living substantially the same sort of life, there was but
little variation in the rates of exchange for each group.
Thus each one computing the value of his crops, in which
all property and profits were measured, naturally rated them
in terms of the commodities which could be procured in ex-
change for them. There was no market in Virginia ; all
transactions were necessarily made on a London basis and,
therefore, were reckoned in sterling money. But this money
itself was not present in the colony ; thei'e was practically
nothing but Spanish silver in circulation, and this was worth
only three-fourths of the sterling money. If a planter desired
to increase his London balances, or to pay for goods purchased
there, he was obliged to pay about one-third more than the
London price, since he had no money except this Spanish
coin or bullion, which could be shipped in settlement. This
fact coupled with the constantly unfavorable balance of
trade compelled him to pay a premium for everything which
he bought.
This premium of about twenty-five per cent, for London
exchange was maintained with remarkable constancy. Ap-
parently it was the rule during the second quarter of the
seventeenth century, as we have seen. In 1775 it was fixed
at twenty-five per cent, by law as the just ratio of currency
to sterling.^ The rate of exchange in 1759 rose apparently
to one hundred and forty, at which point specie was sent to
* Hening vi, 479; and Richmond Despatch^ September 22nd, 1877.
1 40 FINANCIAL II I ST OR Y \}\0
Philadelphia to buy bills of exchange, which were sold in
Virginia at a profit.^ This, however, was due to the slight
depreciation of the papqr money. In 1761 the par of ex-
change in London was one hundred and twenty-five.^ Dur-
ing the Revolution it rose as high as one hundred and fifty,
owing to the depreciation of the paper money ."^ After this
time, when the value of the standard was depressed some-
what by over-issues of paper, the rate of one hundred and
thirty-three per cent, was adopted in legal practice. For a
time judgments for sterling debts were computed at the
exact 'rate of exchange then ruling; but gradually the
method of allowing this fixed proportion of one-third prem-
ium was adopted by the courts.* Thus it became customary
to account six shillings of currency as equivalent to four
shillings six pence sterling in London, where alone it could be
expended to any purpose. The Virginia-Spanish shilling was
really worth only three-fourths of the sterling coin. When
the dollar was adopted, worth a little above four shillings,
the currency gradually fell into place as one-sixth of this new
coin, the nearest ratio in round numbers. Until the refor-
mation of the gold coin in England, four and one-half shil-
lings equalled the precursor of the dollar; but with the ap-
preciation of the silver coin, consequent upon that change,
the ratio approached more nearly that of four to one, at
which it stands at the present time.^
This theory seems to be sustained by the facts observed
in the other colonies. It is complicated here, however, by
the presence of fluctuating paper currencies during the later
' Burnaby's Travels, 717. '^ Wright's American Negotiator, London, 1761, p. v.
^ Calendar Virginia State Papers, ii, 235.
* Virginia Law Journal, August, 1877; Shepard, Statutes, i, 34; Journal of
Assembly, May .25th, 1770; and the case of Wickham in Terrell vs. Ladd, 2
Wash., 150.
^ Adam Smith, Wealth of Nations, book i, chap. v.
I4l] OF VIRGINIA. 141
colonial period, which undoubtedly influenced the course of
development to a certain extent by depressing the value of
the paper currencies. But even in these cases differences
between sterling and currency money are observed long be-
fore any emission of bills of credit. As early as 1685 Eng-
lish coin was "something above one-third higher" than
country money in Pennsylvania;^ and the rate of foreign
exchange — that is, the price for sterling in London — must
have exceeded this by the premium required for interest, in-
surance and cost of tsansportation. Franklin affirms that
the customary rate of exchange in the middle of the century
was one hundred and sixty to one hundred and eighty-five,
while the depreciation of the paper money was slight in
amount.^ A very simple calculation will show that this rate
is nearly proportional to the ratio existing between the Eng-
lish shilling at twenty-two cents, and the Pennsylvania shill-
ing at thirteen and one-third cents.
In New York the premium was somewhat higher previous
to the issue of paper money, owing, it was said, to the
demand of importers for specie to settle foreign balances.
In 1748 the rate of exchange stood at one hundred and
ninety computed in paper, which was not yet depreciated to
any extent.^ In 1761 it had fallen to one hundred and
seventy-five. As a rule the rate was. somewhat higher here
than in Philadelphia ;*. and at the same time the shiUing was
worth less in sterling than it was in Pennsylvania. Our the-
ory assumes that these relative values were maintained, not
^ Gowan, Bibliotheca Americana, i, 354.
2 Works, ed. 1809, ii, 350; Appendix, 421; Hickcox, y/ History of the Bills of
Credit, or Paper Money issued by A'ew york,y]; American State Papers, Finance,
V, 104.
^Bozman, History of Maryland, ii, 391; Hickccx, A History of Bills of Credit,
or Paper Money issued by New York, 37.
* Wright's American Negotiator, v.
142- FINANCIAL HISTORY [142
because the shilling was of different value, thus fixing the rate
of foreign exchange, but because that natural rate of exchange
was different, which led to a depression of the currency-
standard to proportional degrees in each case. These relative
proportions being maintained constant fa)r some time, the
value of the shilling became fixed in conformity with it, and
so persisted in customary reckonings after the abolition 6f
the currency itself.
Of course it will be objected at once, there must neces-
sarily be this close correspondence between the rate of ex-
change and the value of the colonial shilling. For does not
the one serve to measure the other? To show this relation
is merely to prove a self-evident truth. This being so, is
there not as much reason for asserting that the value of the
shilling caused the rate of exchange, as for the contrary prop-
osition? To this we answer, that this might be admitted, if
any cause could be assigned for the value of the shilling in
the first place. But we have shown already that the differ-
ent values of the currency in the colonies cannot be ex-
plained by any conditions entirely resident in the colonies
themselves. The same Spanish money being present in all
of the colonies, the effect of this alone would be to make all
of the values uniform, which did not occur. This currency,
therefore, appears as an inherently passive factor, and not an
active agent. To be sure there was a greater demand for
money for domestic trade in certain of the commercial col-
onies, such as New York and Pennsylvania, than was the
case in Virginia; and it is natural, therefore, that the shilling
should bear a higher value in those places. But this does
not explain the case of North Carolina, where the value was
the same as in New York ! Neither does it account for the
equal values of the shilling which prevailed in Massachusetts
and Virginia. In both these cases the internal conditions
were widely different, and yet the phenomena are exactly
143] ^^ VIRGINIA, 143
alike in both places. Thus we are forced to turn to external
factors once more. It must have been the foreign demand
for specie, and not the extent of the domestic use, which was
the primary factor. And the probability remains that it was
the condition of the foreign trade, which so regulated the
demand for remittances of coin that the shillings gradually
conformed to it by necessity. It was the bidding for money
to supply this demand, which finally established the rate at
which it passed in circulation.
In several respects Virginia was favorably situated in
comparison with the other colonies. There was a constant
demand for her staple commodity in England, which, al-
though limited by onerous customs duties, was not absolutely
prohibited, as was the case with many of the products of the
middle colonies. Then again she was not mad.e to bear an
undue share of the burden of paying for imports for her
neighbors, as was the case with the commercial colonies.
And lastly, the domestic demand for money was less, in the
absence of towns. The slave obviated the necessity for a
wage fund ; and the tobacco notes were a ready substitute
for money. To be sure, the supply of coin from the Spanish
West Indies was largely obtained indirectly through the
other commercial colonies ; but even here the close rela-
tions with New England for many years were a partial
equivalent.
Virginia, therefore, had to struggle against lesser odds
than some of the other colonies. If it was indeed the un-
. equal pressure put upon the coin, which caused the great
diversity in the standard among them ; and if it be true that
Virginia had less to bear in this respect ; it is natural to ex-
pect that the value there will depart less widely from the
English standard than was customary in other places. The
whole monetary history of the Commonwealth has shown
that the need for specie was less urgent than elsewhere.
144 FINANCIAL HISTORY [144
The value of current coin was never raised until after all her
neighbors had bid it up, and were threatening to rob her of
her just proportion. And even as she was backward in this
matter, so also was the progressive depression of her stand-
ard restricted. It went on, as we believe, until the proper
proportion to suit the conditions of the foreign trade was
reached. There it was arrested naturally, and the value of
the current money stood as an indication of the general bal-
ance of her trade with Great Britain.^ This alone deter-
mined it in those times ; for there was no other trade, and
could be none until the whole hateful system was abolished
in the course of time.
^ Wright's American Negotiator^ Int.^ viii.
CHAPTER VI.
PAPER MONEY.
Tobacco Notes. Besides the ordinary money which was in
circulation in Virginia, a supplementary currency was used,
which has never been adequately understood. Those who
have written of it at all, have treated it so loosely that its
true significance has been lost. We shall see that it did not
serve as a complete substitute for specie ; for it was con-
fined to certain localities in the colony and, moreover, it
was not a legal tender for all debts. Nevertheless, it was an
ingenious contrivance for supplying the monetary needs of a
simple community, insufficiently supplied with metallic cur-
rency.
The whole of the seventeenth century is marked in Vir-
ginia by a continual struggle against fate to uphold the price
of tobacco. Expedients of all sorts were tried ; restrictions
were imposed upon planting, and crops were half destroyed;
agreements were made with Maryland and the Carolinas to
secure united efforts ; but it was all in vain. After a time,
however, the depreciations seem to have come to a stop, so
that prices did not vary extensively after 1700.^ Public in-
spection of tobacco had existed in Virginia from the earliest
days. In 1632 warehouses were erected to be under the
charge of appointed keepers. No tobacco was allowed to
pass in payment of debts until it had been overlooked.
And all such debts were settled at the warehouse by a mere
transfer of book credits." This system, with some modifica-
' Vide quit-rents, supra. ^ Hening i, 204.
(145)
L^
1 46 FINANCIAL HISTOR V [ 1 45
tions for the more sparsely settled districts, where ware-
houses could not be located conveniently, was adhered to
until about 1700.
About this time the need for a reform was apparent to all.
There were two inconveniences in the old method of making
payments in bulk tobacco. In the first place, it was costly
and cumbersome, — objections which were urged in New
England about the same time against the payment of levies
in grain. ^ We are presented in history wifh the pleasing
spectacle of " gallant young Virginians hastening to the
water-side, each carrying a bundle of the best tobacco under
his arm " in order to purchase a wife.'^ This was perhaps
well enough when tobacco was rated at three shillings a
pound. But when it had fallen to two pence per pound, the
burden of these ardent lovers would have amounted to above
two tons. It is diflficult to conceive of even a gallant Vir-
ginian " hastening" under such circumstances. As for trans-
portation by wagon, it was next to impossible, since the roads
wxre so few and bad. The numerous creeks and rivers were
used, but with the extension of the settlements into the in-
terior, the difficulties were vastly increased. The second evil
of this system was the liability to fraud and deception, which
could be easily practised by designing debtors. And the
government was the most important creditor in this respect.
The Governor said, " The Publick Credit is so sunk by these
payments, that, as now, no service is readily performed for
them. So I am confident no money could in any Exigency
be borrowed upon the faith of them.'^
The tobacco notes which were introduced by Governor
Spotswood were intended to remedy these abuses. The
^ Felt, Historical Account of Massachusetts Ctirrency, 53.
^ Gouge, A Short History of Paper Money and Banking in the United States, 4.
'^Calendar Virginia State Papers, i, 168.
147] ^^ VIRGINIA. 147
primary object, however, was to secure a more stable value
for the tobacco which was received in payment of the quit-
rents.^ It will be remembered that these . dues, originally
payable in money, had been commuted to tobacco at a fixed
rate, at the earnest solicitation of the people. About 17 10
the Governor began to consider the question seriously, and
his correspondence is filled with discussions of the problem.
At last he decided upon a bill providing for a more rigid
inspection of tobacco,' which had been neglected for some
years. With this was to be instituted a *' convenient method
that establishes for the making all P'ments by the agents
notes, which are to pass like Bank Bills." ^ The Governor
was evidently proud of this idea, for he wrote to the Board
of Trade : *' I must owne myselfe to be not only principally
concerned in framing the Bill, but even from the beginning
the Sole Author of the Scheme."
This was not a fact, however.. Already in 1685 a pam-
phlet was published by one Budd, advocating the issue of
notes,' based upon the deposit of duly inspected hemp, flax,
linen and other commodities in public warehouses. This
project was revived in Virginia even in 1705, wh^fi to-
bacco was proposed as the basis for such a currency.* Noth-
ing came of either of these proposals, and it remained for
Governor Spotswood to secure a practical application of
them. The system was actually introduced in accordance
with his plan, although there is no repord of any such legis-
tion in Hening's Statutes. The law was satisfactory to the
government apparently ; the Governor wrote of it two years
later, "The scheme is likely to answer fully my expectations
— the Publick Credit which was one main end thereof being
.^ Spotsxvood letters, ii, 6i. '^letters, December 29th, 1713.
^ Good Order Established in Pennsylvania and New Jersey, reprinted in
Gowans, Bibliotheca Americana, i, 337.
* Calendar Virginia State Papers, i, 96.
148 FINANCIAL HISTORY [148
now raised above two hundred per ccnt."^ Unfortunately
there was determined opposition to the law on the part of
the planters. A sheriff of Essex County complained that
" the people's inclinations are so great against the Tobacco
law, that they have not meet me to pay their Dues, so yt
all are unpaid. They further signifie Their Dissatisfaco" by
burning one of Mr. Buchner's Store houses^^by running away
with their Tobo to buyers, so yt its near if not quite all
sold."'^ The difficulty finally merged in that struggle of the
colonists to secure control of the quit-rents for their own
use, which resulted in the suspension of Colonel Ludwell, the
Auditor. At last the law was repealed, in obedience to the
popular clamor. Perhaps the best criticism of it is tha£
" though the first design was for public tobacco only, yet
the private crops of gentlemen being included in the law was
esteemed a great grievance, and occasioned complaints
which destroyed a law, that with small amendments might
have proved most advantageous."''
No further attempt was made to reintroduce this note sys-
tem until 1730, when it was established in a slightly differ-
ent foj:m which gave' less offense to the planters.' This act
''For Amending the Staple of Tobacco; and preventing
Frauds in His Majesty's Customs," was passed by the As-
sembly with two distinct objects in view. The first of these
was to provide for such inspection of the staple export of
the colony as should prevent it from being brought into dis-
credit abroad, to the damage of the general interests of the
colony. The second and minor object, was to provide a
convenient medium of circulation for local or domestic ex-
changes, and especially for the payment of taxes, quit-rents,
fees and other public dues. In this latter sense it may be
^Letters, March 28th, 1715. ''■ Calendar Virginia State Papers, i, 181.
^ Hugh Jones, Account etc, 556.
149] ^^ VIRGINIA. X49
regarded as a mint regulation to prevent fraud in the pay-
ment of debts through debasement of the medium of ex-
change. Since our purpose is to show its ^scal importance
merely, this latter object alone will be held in view. The
first consideration belongs rather to a history of commerce.
The act of 1730^ provided that no tobacco should be ex-
ported from the colony, or used in the payment of any pub-
lic or private debts, until it had been inspected by two
public officials appointed by the Governor on the nomina-
tion of the county courts. This tobacco was then to be de-
posited in casks in public warehouses, conveniently located
in each county for that purpose, there to remain until it was
exported. If it were to be used for the payment of any do-
mestic debts, ** promissory notes" were issued to the full
amount of the tobacco on deposit. These "transfer notes"
were to state the amount, the particular brand, the date of
deposit and the warehouse wherein the tobacco lay. They
were to be a legal tender for all tobacco debts in that par-
ticular county where the warehouse was located, or in any
adjacent ones, not separated from it by one of the great
rivers. They were to be convertible into tobacco on de-
mand at the warehouse where the tobacco was deposited,
but they were not to constitute a lien upon any particular
casks ; they were merely representative of a given amount of
tobacco of a certain grade. In order to prevent discrimina-
tion or inequality in the payment of public debts, due to the
difficulty and cost of transportation to the warehouses from
different places more or less distant, certain drawbacks were
permitted. These varied from thirty per cent, in the inland
counties to ten per cent, on the shores of Chesapeake
and on the great rivers. For private exchanges, however,
such drawbacks were neutralized by reimbursing the creditor
* Hening iv, 251.
I c o FIX AN CI AL HIS TOR Y [ i q q
from tobacco levied by the county courts for that purpose.
In case of destruction of the warehouses by fire or flood, the
Assembly held itself liable for the loss incurred.
A substantial addition to this system was made in 1734,
when a second variety of circulating notes was authorized.^
This was to provide for the case of the *' private crops of
gentlemen," which gave so much offense in the first law.
This law applied to all tobacco which was merely stored
awaiting export, and not intended for the payment of public
dues. For such tobacco, so-called "crop notes" were issued
against specified hogsheads which were distinctly branded
and specially reserved until the notes representing them
should be presented. The inspection for this tobacco was
less rigorous, and the fees were only about one-half as great
as those allowed for the inspection of transfer tobacco.
Provision was made for an exchange .of crop for transfer
notes by the payment of an additional fee.
These two varieties were as distinct from one another as
are the United States Silver Certificates and the Treasury
Notes of 1890. The crop notes, like the Treasury Notes of
1890, were mere issues of paper against the deposit of a
commodity in bulk. The transfer notes on the other hand,
issued against minted tobacco, so to speak, resembled the
Silver Certificates which are issued against coined silver
dollars. Yet, strange to say, their legal tender qualities were
exactly reversed. In Virginia the minted tobacco representa-
tives were a legal tender for all tobacco debts, while the notes^
issued on mere crop tobacco were denied that quality at first.
In the United States, the Treasury Notes issued on coined
dollars are not legal tender, while the representatives of mere
silver bullion are receivable for all debts. Of the two, the
Virginia plan seems more reasonable. We must beware,
* Hening v, 388.
151] OF VIRGINIA. I t r
however, of carrying the analogy too far. For in the United
States silver is a rapidly depreciating commodity, while
tobacco during the eighteenth century held its own bravely.
This system underwent but few modifications in the colo-
nial period, except so far as changes in administration were
made necessary by the increase of population and the deter-
mined attempts to evade the law. The transfer tobacco
which was received in the payment of public debts was sold
annually, and the proceeds were devoted to the proper uses.
They were not to pass current after that year, but others
were substituted for them. Gradually the crop notes seem
to have become used for the payment of debts, which appar-
ently was not the original intention of the legislators. This
led to considerable frauds, and in 1748 a more stringent law
was enacted, strictly and effectively limiting the legal tender
quality to the transfer and crop notes. ^ The system was
suspended for a time during the war of 1755, but in 1761
was revived in the old form. The only change previous to
the Revolution was a reduction of the time of deposit for crop
tobacco notes from eighteen -to twelve months. This was
found necessary to prevent the great waste from shrinkage.
The act to continue this system having expired in 1775,
the Assembly resolved to substitute payment in bulk for the
use of notes.^ All public dues were henceforth to be ren-
dered in clean tobacco tied in bundles. Two neighbors were
to adjudge its quality, as well as of the deduction which
should be made for transportation. This was productive of
great fraud :^ so that at the next session tobacco was de-
clared a legal tender only when it was delivered at certain
appointed places.* During the Revolution the community
was often reduced to the direst extremities for the lack of a
^ Hening vi, 222. ^ Ibid., ix, 96.
^ Smyth's Travels, ii, 137. * Hening ix, 132.
I 5 2 FINANCIAL HISTOR Y [152
circulating medium ; tax receipts were accepted for new
taxes, and great confusion ensued. Finally, in 1783, the old
system was again put in force,^ and payments in kind were
prohibited/
At first there was the direst confusion. The market price
of tobacco varied from twenty-eight to eighteen shillings a
hundredweight, according to the situation of the warehouses.'
Moreover the rigidity of the inspection varied widely, and
this also served to give different values to the notes, accord-
ing to the reputation of the inspectors^ through whose hands
the tobacco 'had passed. In fact the whole project of re-
ceiving tobacco in lieu of paper money for public dues was
adopted merely to prevent the inflationists from demanding
more bills of credit. James Madison, as a member of the
Assembly in 1786, wrote that ** in accepting tobacco for a
commutable we perhaps swerved a little from the line on
which we set out. I acquiesced as a probable means of ob-
viating more hurtful experiments ; there is reason to hope
the public treasury will suffer little, if at all. It may possi-
bly gain."^ As a matter of fact it really entailed a loss to
the State of five to six per cent, on all its tax receipts, al-
though it undoubtedly did avert the danger of more paper
money. In 1 792 a detailed act revived the old system in its
entirety. The gradual retirement of old warrants, certifi-
cates of indebtedness and bills oi credit, which had formerly
sufficed," rendered these tobacco substitutes necessary.
There is little more mention of the system in the laws, how-
ever, and it is probable that it was gradually displaced by
the money issued by the United States."
' Hening xi, 205. ^ Ibid., 289.
" Ibid., xii, 258. * Warville's Travels, 436.
^ Letters, December 4th and 7th, 1 786; as well as Joseph Jones' Letters, July 23,
1787.
* Rives, Madison, xi, 146. "^ La Rochefoucauld's Travels, 69.
1^3] ^^' VIRGIXIA. 153
We have seen that on the whole these notes were a good
substitute for hard money in a rural community. They were
not liable to the abuses of paper bills ; and they never suf-
fered depreciation. Yet, of course, they were open to the
dangers incidental to any paper money based upon a com-
modity whose value rises and falls from year to year. Finally
it must always be borne in mind that they were legal tender
only in the immediate locality of the warehouse in which the
tobacco was deposited. It is unfortunate that the last two
writers who have attempted to describe the system should
have given the wrong impression in this respect.^ They
were probably intended to act as a circulating medium for a
limited time ; they circulated only within a circumscribed
area ; and lastly they were not used until after the middle of
the colonial period — all of which features are misrepresented
in the only works on the subject. The present value of this
study lies in the fact that the recent proposals of the Farm-
ers' AUiance in the United States are almost identical with
those which were applied for over half a century in Virginia.
Nevertheless the conditions are so radically different to-day,
that this study will but serve to show the utter inadequacy
of such fiscal systems to the complex transactions of Our
modern trade and commerce.
Treasury Notes. The Commonwealth of Virginia stands
almost alone among the colonies of America in abstain-
ing from the issue of paper bills of credit during the first
half of the eighteenth century. We have seen that she
had made use of an admirable substitute for coin by means
of notes issued against deposits of her staple commodities ;
and besides this there seems to have been considerable coin
in the colony. Thus the demand for a circulating medium
was fairly well satisfied during this time of peace.
^ Henry Phillips, Jr., and Chastellux.
I 5 4 FINANCIAL HIS TOR Y [ I ^ 4
In 1755, however, war" with France broke out and the
supply of silver which had been coming into New York and
Philadelphia from the Spanish colonies was cut off. Ex-
change on London rose rapidly, and this, with the natural
tendency of a people to hoard at such a time, resulted in a
complete disappearance of all specie. Moreover the con-
centration of forces about New York also called for a large
amount of cash, which was drawn by bills of exchange.
The Governor issued a call for the Assembly to meet on
May 1st, 1755, to consider the situation. He had apparently
considered the probable necessity for some issue of paper.
Governor Dobbs, of North Carolina, suggested in January
that a Loan Office to issue paper notes upon landed security
might be possible ; to which Governor Dinwiddle replied ; —
** the method you propose, I think very eligible."^ When
the Assembly met, however, they finally decided to raise
twenty thousand pounds by extra taxes. Yet this money
was needed at once. To wait until levies had been made in
tobacco, and this again could be converted to the use of the
Assembly, would have been ruinous. Therefore — " as silver
and gold are very scarce, they issue i^20,000 in Treasury
Notes to be discharg'd and p'd next June."^ These notes
were to bear interest at five per cent, and were to be a legal
tender for all debts except the quit-rents.
In August came the news of Braddock's disastrous defeat,
which showed that the struggle was to be more serious than
at first had been supposed. A special session of the As-
sembly was immediately called, and forty thousand pounds
more in notes was willingly granted.' These were to run
for four years, and like the first, were fully covered by extra
taxes upon lands and polls. Of these the Governor wrote :
" our Treasurer's Notes pass for cash, bearing five per cent.
^ Z^//^r5, January 17th, 1755. '^ Letter Sy June 8th, 1755. ' Hening vi, 528.
155] ^^ VIRGINIA. 1^5
interest, w'ch I think is equal to Silver or Gold, — the Sub-
jects have the several Taxes secur'd to them foi the s'd Pay-
ment— and I took Care y't the time for call'g thepi in sh'd
be short." ' The success of these substitutes for cash seems
now to have over-excited the popular representatives when
they reassembled in October. The Governor reported of
them that ''they endeavor'd to pass an Act for issuing two
hundred thousand pounds Paper Money, to be curr't for
8 Years, with't proper Security. I formally gave my consent
to vizt, ;^20000 and ^^"40000 by the Advice of the Council,
and on the pres't Emergency of our afifairs : but the last at-
tempt— w'd ruin the Credit of the Co'try, encourage ex-
travagance and Idleness among the young People of JEstates,
who w'd have borrow'd large Sums from the Office."' The
craze still spread, however; in April, 1756, seven of the most
populous counties sent in a petition praying for a loan office
for three hundred thousand pounds, alleging that the scarcity
of cash was so great "■ that families are likely to be ruined by
having to sell goods for one-half value." ^
The Governor was firm, and refused to assent to any such
schemes. He tried to induce Parliament to impose a gen-
eral land tax on all the colonies, or to issue a special cur-
rency to pay for the expenses of the war, but to no avail.
After the emission of these first notes the Governor's cor-
respondence assumed a very apologetic tone. He wrote
to the Earl of Halifax : *' I always was averse to Paper Mo.,
but I beg leave to assure Y'r L'd'p, y't with't it they w'd
grant no supplies ; — the absolute necessity and Emergency
of our affairs prevail'd on me.'" The only issue to which his
consent could be obtained during this year was one of
;f2 5,ooo.^ An issue of ;^ 10,000 was also made to recom-
^ Letters, August 25th, September 6th, 1755, and March loth, 1756.
"^Letters, November 15th, 1755. '^ journal, April 6th, 1756.
* June loth and July 27th, 1756. ^Hening vii, i8.'
I 5 5 FINANCIAL HIS TOR Y [ I 5 6
pense the holders of tobacco notes, who suffered by the de-
destruction of two warehouses ; these last notes, however,
were fully secured by an extra tax upon tobacco exported.*
In April of 1757 the first two issues of paper were called
in, and new notes without interest were substituted for them.
The former allowance of interest was declared "to be very
burthensome to the country," for it was found that the notes
all bore different values according to the periods for which
they were to circulate. The new notes were to be of vari-
ous denominations from five pounds to a shilling, and to be
redeemable in 1765. This seems to have been satisfactory
to Gov. Dinwiddle, who reported that they had granted " all
he desired."'* The emission of i^8o,ooo in notes does not
seem to have caused any uneasiness, as he affirmed that taxes
were laid which would fully secure them all.
The policy of the Commonwealth was now definitely
decided upon, and the issues of notes followed each other in
regular succession. In March, 1758, thirty-two thousand
pounds was emitted ; in September, fifty-seven thousand
pounds, and in the following February, fifty-two thousand
pounds. The Treasurer was empowered to borrow ten
thousand pounds in November, 1759, if it could be done.
This is the first instance of any attempt to contract loans for
an indefinite term of years ; and it was apparently not re-
garded with much confidence, as the treasurer was em-
powered to issue notes for the amount in case the loan could
not be obtained.' One-half of this loan was merely a com-
pletion of the quota allowed by a former act. The real addi-
tion to the circulation in 1759, therefore, was but fifty-seven
thousand pounds. All these notes were to be redeemed in
eight years, and were well secured by extra taxes. The obli-
gations at this time incurred amounted to above four hundred
' Hening vii, 48. "^Letters, June 14th, 1757. ^ Hening vii, 334.
I^-r] OF VIRGINIA. 1^7
thousand pounds ; but the taxes, though heavy, were con-
fidently believed to be sufficient to uphold the credit of the
notes.^
In May, 1760, it became necessary to emit thirty-two
thousand pounds to provide funds for the relief of the garri-
son at Fort Loudoun."^ This extra sum in addition to the
regular emission of March of the same year, which amounted
to twenty thousand pounds, seems to have cast the first
shadow of distrust upon the paper money. The first emis-
sions had come due in the preceding year, and had been
promptly paid ; no provision had been necessary to punish
depreciation of them beyond a nominal penalty of twenty
per cent. By 1761, however, the variety of the issues, and
their different periods of redemption, began to create suspic-
ion. In November of that year, the Assembly declared it to
be *' of the greatest importance to preserve the credit of the
paper currency of this colony," and proceeded to take effect-
ive measures to secure that result. All of the notes then in
circulation were made redeemable after October 20th, 1769,
The British government by this time manifested its settled
purpose to aid the colonies, and ;^200,000 in money had al-
ready been granted.^ Nevertheless the English factors of the
planters, to whom the security of the bills was of great im-
portance, were not satisfied. Already in 1759* they had se-
cured the sending of instructions to the Governor, to enforce
suitable provision for foreign creditors ; but in spite of it, the
notes were persistently declared a legal tender for all debts.
The aid from Great Britain now proved sufficient to prevent
the necessity of further . inflation of the currency. But one
more emission of notes was made during the war, when in
March, 1762, ;^30,ooo was issued on the security of an ad-
^ Burnaby's Travels. ^ Hening vii, 360.
^ Governor'' s Address, November, 1761. * Journal, November, 1759.
I 5 8 FINANCIAL HIS TORY [ I 5 8
ditional poll tax.' During this year the British government
had remitted over ;^i 8,000 in money, which had been used
for contingent expenses.'^ The problem which next con-
fronted the colony was the necessity of providing for the re-
demption of the notes when they came due.
The Treasury Notes apparently sufifered some depreciation
by this time. And although it was probably not consider-
able, it seems to have occasioned some disquietude.'' In
opening the session of 1762, the Governor cautioned the
Burgesses, saying, " it hath been found that the meddling
with the Medium of Trade, whether it be Bullion or Paper,
is of a delicate nature, and is often attended with a long
train of very distant consequences." * Despite this warning
the Assembly protested that they had no other " Means of
defraying the Expenses, than by a new Emission of Treasury
Notes which may depreciate the Value of the Notes already
issued."^ Yet the Governor again refused his assent, and no
bills were issued.
The British merchants were still unfortunate in their de-
mands for sterling remittances during 1763, and the Gover-
nor forcibly demanded consideration of the question.** To
this the Burgesses respectfully replied that " they never
thought it just to circulate them without making them a
Legal Tender, nor could we ever have been induced to emit
them on any other terms. "^ They were persuaded, however,
to appoint a committee to investigate the security on which
the notes were based. This committee reported that taxes
had been laid to produce ^424,000 by October, 1769, which
was ^i 1,000 in excess of the value of the notes in circulation."
^ Hening vii, 497. '^ Journal, November 2nd, 1762.
"^ Massachmetts Historical Collections, x, 52 1 . ♦ Journal, November 2nd, 1 762.
= /^?^., Jjecember 2nd, 1762. ^ Ibid., May 19th, 1763. "^ Ibid.
"^ Ibid., May 24th, 1763.
1^9] OF VIRGINIA. 159
The Assembly therefore resolved in regard to the treasury
notes that *' to alter the essential quality of them would be
an act of great injustice to possessors." Four days later they
followed this by an elaborate defense of the policy of the
House, declaring that Virginia was only following the exam-
ple of the other colonies. "■ Even then," they continued, ''we
chose at first to borrow ;^ 10,000 at the high interest of six
per centum, and never till after that resource failed went into
a measure so little relished ; there are no warm advocates of
paper money among us, further than to preserve the credit of
what hath been issued, and prevent the evil consequences of
stopping its circulation at this Time. The want of specie was
the sole Cause of issuing our Notes ; there will require no
other Reason to be assigned for our not circulating them
upon the footing of Bank or Exchequer notes. ^" After which
declaration they resolved not to remove the legal tender
quality of the bills. To this argument Governor Dinwiddle
had nothing to reply except to " candidly acknowledge the
taxes are sufificient, but I think you might have shown this
sooner."^ Despite which assertion, the whole matter was ar-
gued again at the following session of the Assembly, with the
same results.
A new scheme was now devised in 1765, which was pre-
sented from a committee of the whole by Peyton Randolph,
who seems to have been the innocent tool of a corrupt cabal
of officeholders.-^ The project was for a Loan Bank, which
should issue notes on landed estates, by means of which the
Treasury notes were to be removed from circulation. ;^240,-
000 sterling was to be borrowed in Europe at five per cent,
of which i^ 1 00,000 was to be secured in bills of exchange.
^. Journal, May 28th, 1763. 2 jud,^ May 31st, 1763.
^ A complete description of this plot is given in W. W. Henry's life of Patrick
Henry. Vide also Journal, May 24th, 1765; History of Virginia, by Chas.
Campbell.
1 60 FIX AX CI AL HIS TOR V [^ I 60
The remaining ;^ 140,000 was to be in sterling money on
which Bank Notes were be issued. In order to provide for
the interest and a sinking fund for this debt, which was to be
all redeemed in 1779, a heavy tax on the export of tobacco
was to be laid. And to reimburse the planters for the extra
burden, they were gradually to be repaid from the proceeds of
a special poll tax. The final burden was thus shifted upon
the heads of the people at large. Fortunately for the colony,
w^e may believe, this scheme came to naught, being opposed
alike by the Council, and the Commoners under the lead-
ership of Patrick Henry. The death of the Treasurer soon
after, revealed the true nature of the project.
All of the extra war taxes were repealed in 1768, as the
ordinary levies were deemed sufficient to retire all of the
notes then in circulation.^ Thus ended the first experience
of Virginia with paper money. As a whole it is a creditable
record. And the judgment of a contemporary governor
seems well founded, that '' the loss on Virginia paper was
honestly acquired by the Government's exerting itself in the
common cause. Had it looked on tamely as Maryland did,
like an unnatural ofifspring, it had not been blamed, perhaps
commended ; Maryland is happy because it has been dis-
obedient and neglect'd her duty."^ There was undoubtedly
a considerable party in the legislature which favored paper
money ; and perhaps it was the firmness and wisdom of the
Governor which averted the danger. But we must remem-
ber the distress of the times, and the heroic exertions of the
colony during the war. In view of these facts, the modera-
tion and foresight of her statesmen is in marked contrast
with the reckless financiering of some of the other colonies
both north and south.
^ Hening viii, 297.
^ Massachusetts Historical Society : Aspinwall FaJ>er5f vol. x, 521.
l6l] OF VIRGINIA. , j5j
The expedient of making compulsory loans by m.eans of
the'issue of Treasury notes was not abandoned at the close
of the war.^ Two more emissions were made, the first in
1769, to provide funds for the survey of the boundary of the
Cherokee lands, as well as to defray the cost of an importa-
tion of copper money. These notes were to be redeemed
in two years, and although no money seems to have been
imported, the notes were duly issued. Yet since the taxes,
on which they were based, produced over i^ 11,000, they
were promptly redeemed.""* A second emission of ^^30,000
was made in March 1771^ to cover losses of tobacco in the
public warehouses ; and these were likewise well secured by
taxes. Both these issues of notes were so badly counter-
feited that the Governor was obliged to call an extra session
of the Assembly in 1773.* This body authorized a loan of
^36,834, if it could be made, to retire the old notes. In case
of failure to obtain this the Governor was empowered to is-
sue "promissory notes" to be redeemed in 1774.^ These
were not to be legal tender, but were to pass current among
" all who may be willing to receive them." In case the taxes
did not suffice to sink them all by 1774, new Treasury notes
were to be substituted for them. Already the possibility of
war was recognized, and the impending conflict doubtless
served to depress the value of this paper money. The pro-
visions of the law itself show a lack of confidence among the
Burgesses as to the future.
The old issues of notes, although in the estimation of the
Assembly fully secured by taxes, had by no means dis-
appeared from circulation. In 1772, three years after the
date for their retirement, there was ^^88,189, or nearly $500,-
000 worth of them still in the hands of the people. The
■ ^ Hening viii, 346. * Journal, March 6th, 1772. ^ Hening viii, 500.
* Jourital, March 4th, 1773. ^ Hening viii, 647.
1 62 FINAA' CIAL HIS TOR Y [ I g 2
funds for their redemption exceeded this by over ;^ 11,000,
but of these estimated assets, ;^i 8,000 consisted of arrears
of taxes, which were largely bad debts.^ The defalcation of
the late treasurer had given a considerable shock to public
confidence ; and Indian troubles had imposed an additional
debt of ;^i 50,000 on the colony.^ Moreover, counterfeiting
was rife, and no hard money was to be obtained at any
price. Under such conditions, it is no wonder that states-
men should contemplate with alarm a great war, which must
be fought largely upon credit. The disasters which at-
tended the succeeding issues of paper money belong, how-
ever, to a history of the Revolutionary war. It sufifices here
to know that previous to that time, Virginia had made a
record more creditable than almost any of the other colonies.
^ Journal, March 6th, 1772.
^ Phillips, Historical Sketch of American Paper Currency, i, 200.
CONCLUSION.
In many respects the development of the financial institu-
tions of Virginia is not unlike that of the other American
colonies. As in New York, this colony was founded and
managed for a time by a private corporation, instituted for
purely commercial purposes. And the same development
which ensued in the Dutch West India Company took
place here ; that is to say, the private company soon suc-
cumbed to the pressure of permanent public policy. In the
second place, Virginia was subject to the same restrictions
upon the levy of import duties, which prevented New York and
Massachusetts from deriving any considerable revenue from
this source. The effect in both cases was to throw the col-
onies back upon their own resources, such as direct taxes
upon property or upon the export of their own products.
But in this respect Virginia enjoyed a particular advantage
over the othoj* colonies, in that her staple products were by
no means entirely consumed in Great Britain. Four-fifths of
her tobacco exports merely passed through England, yield-
ing a handsome profit to British merchants on the way.
The agricultural products of the middle colonies, on the
other hand, were excluded from the mother country abso-
lutely; while the naval stores and lumber of New England
were needed for the Royal navy, and could not be heavily
taxed without serious detriment to British interests. As a
consequence of these conditions of trade, Virginia alone was
offered an exceptional opportunity to tax her exports, and
thereby to decrease greatly the necessity for direct taxes
(163)
1 64 FINANCIAL HISTORY \l6^
upon polls or property without interference from Great
Britain.
In all the colonies alike, the general property tax tended
toward the middle of the seventeenth century to become, first
a resource upon extraordinary occasionsf and then a perma-
nent basis of revenue. But this peculiar commercial advan-
tage of the southern colony reheved her from the disagreeable
expedient of direct taxation to some extent ; so that the poll
remained substantially as the sole form of a direct tax for a
century and a half. Had her revenues from tobacco failed,
as did the slave duty, by reason of the cupidity of the
mother country, there would have been no escape from the
general property tax which was so common among the other
colonies. As it was, the absence of a tax of this nature
formed the most distinctive difference which existed between
the systems of Virginia and the northern colonies.
It is not dif^cult to discover another cause for this funda-
mental difference between the two systems. The general
property tax is based upon possessions as the measure of
ability to contribute. The poll tax, on the other hand, in a
slave-holding community, measures the ability according to
the power of production. Lands, buildings and other forms
of realty are regarded as merely inert passive conditions
favorable to the creation of new wealth, but of no value till
the labor of man has developed their latent productive ca-
pacities. And this productivity should be directly propror-
tioned to the labor expended upon them. Consequently a
tax measured by the amount of this labor will correspond
approximately to the total wealth which will be produced by
the combined action of land, labor and capital. That is to
say, in the system of slavery, labor and capital being united
in one person, a tax upon the poll will be at once a tax upon
possessions and upon productive ability.' An income tax was
^ Vide note to page 21, and page 27.
1 55] OF VIRGINIA. 165
required in Massachusetts to round out this primitive natural
theory of ability, by supplementing the general property tax
upon possessions. And when this element disappeared, fol-
lowing the course of history the world over, possessions re-
mained as the sole measure of taxable ability. In Virginia
this separation could not be efTected, since both elements of
production were combined in the slave ; and consequently
the conception of productivity as opposed to property per-
sisted as the basis of taxation.
Slavery is a primitive natural process of production. The
poll tax is a simple expedient, which is peculiar to a less
highly developed state of society than that of free contract.
The one is a logical result of the other, even although in
this case the poll tax was not considered as nota captivitatis
as it was in Rome. Slavery, therefore, is the ultimate factor
w^hich distinguished the colony of Virginia from those of
New England. Her people came from the same nation,
with the same inherited tendencies, subject to the same
regulations of the mother country. But their fiscal systems
became radically different, because the outward conditions
of climate, soil, and situation were totally unlike. This
history attests the truth of the law that the direct imme-
diate environment is after all the most powerful factor in
shaping early social institutions. In ethics, politics, and all
the relations of intellectual life, this influence is less marked.
Taxation and finance, however, are the connecting links be-
tween the material and the invisible bonds of society ; and'
their form is dependent upon both the one and the other of
its constituent parts.
Perhaps it is the greatest significance of this system of
negro slavery, that it shows so clearly the intimate relations
which obtain between the political and economic institutions
of society. In a slave-holding community social privileges
and class distinctions are bound to exist. These tend to the
1 66 FINANCIAL HISTORY \\66
cultivation of a conservative spirit, which is especially char-
acteristic of the fiscal policies of aristocratic societies, these
being dominated by representatives of vested interests. A
further consequence of this social differentiation is that fric-
tion between the various orders of the people will be en-
gendered; which will be most pronounced in matters of
finance and taxation, since on this ground the personal rights
'Of the many and the property rights of the few come into ap-
parent conflict. To study the course of this development is
to throw a new light upon many questions which are of
great social importance to the student of human institutions.
And in this possibility rather than because of any valuable
technical results which may be discovered, lies the justifica-
tion for a study of the finances of primitive societies.
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